Debt collection is like the cousin nobody wants to talk about. Every business has to have a debt collection process and understand the benefits of debt collection software. Most small business owners do not enjoy this aspect of their business. But it is vital without it businesses bleed cash flow so how do you implement a system that maintains your client relationships and your cash flow?
3 Reasons Why People Avoid Debt Collection.
There is no business that does not at some point have a client that has not paid an account. The problem is that most small businesses do not know how the debt collection process works. And more importantly, they do not like that side of the business so they tend to sweep overdue accounts under the rug. This affects cash flow and ultimately businesses either have to write bad debts off or hand accounts over to collections agencies.
Single person business.
Small businesses are known for moving very, very quickly when they open up. And the biggest issue with this is often this comes at the expense of critical or crucial small details, such as setting up that streamlined way of doing things that everyone in the organization can follow.
When you start out in business you are on your more often than not on your own due to cash restraints. This means that in many new businesses the business owner is also the admin clerk, accounts person, debt collector, and salesperson. All these hats make it difficult to manage each aspect and debt collection gets pushed to the back of the queue.
This is detrimental to the business, as the more delinquent accounts there are the worse the cashflow is. This results in little to no growth of the business. You need to make sure that even if you are a one-person business you are spending time on the overdue accounts.
Difficult Conversations With Debtors.
It’s uncomfortable having tricky conversations with people, especially if it’s about money, and especially if it’s not part of your everyday practice. There’s also the added worry of possibly damaging the relationship between yourself and the client, or losing rapport with customers. But lets be fair most people don’t like to have those difficult conversations.
It’s also common in small businesses that you actually just don’t have the experience in conflict management. Or you might not be fluid in the type of language to use. Many people just have a fear of putting their foot in it when it comes to debt recovery conversations.
Time Management and Resource
A very common problem when it comes to debt recovery, especially in a smaller or newer business is not having the time to follow up on debts even though you’ve got the best of intentions. It becomes very easy to put it off or procrastinate because you are too busy. Let’s also be honest, you would rather be doing anything else than chasing customers for debt recovery.
The hours and days after an account becomes overdue are critical. The longer it takes to follow up on an account the greater the chances are that you are not going to recover those funds. Remember that trying to do everything yourself is not the most productive use of your time. If you are busy seeing clients, you don’t have the time to follow up on the overdue accounts. And you are not adequately resourced for prompt debt recovery.
Benefits of Debt Collection Software
When you use software you, retain control of your bad debt book. And can manage the notices etc that you want to be sent to your clients. There may be monthly or annual costs for the software but this is not a percentage of each account.
The software also allows you to hire a debtors clerk or admin person to manage your accounts. It also gives you the option to fully manage the accounts yourself without having uncomfortable conversations with your clients.
Reasons you should use debt collection software.
Using software like IsoDebt ensures that your unpaid accounts are managed effectively and consistently. Consistency maintains your message and your clients need a predictable flow of information from you.
2:: Instant, Accurate Data.
With automated debt recovery software, the data in front of you is real-time and accurate. Guaranteed. No double-checking required, just reliable information you can count on.
3:: Automation of Manual Tasks.
The best part about the software is its ability to automate manual tasks and processes. Smaller repetitive tasks are taken care of automatically and you are notified as soon as an intervention or approval is required.
4:: Multiple Communication Channels.
By using multiple communication channels you can send notices to a debtor via email, SMS, or WhatsApp. This means that your notices are being sent on three of the most popular communication channels.
The goal at the end of the day is successful debt recovery. Debt collection software goes a long way to ensuring reliable, accurate processes and reduced revenue leakage. Cash is king and every business needs a stable cash flow to succeed. If your practice is bleeding cash due to bad debts not being recovered then you need to consider debt collection software.
For information on our IsoDebt Software please click here