Debt Recovery & Commercial Debt Collection Agency - Ranger Financial Services

Why is Commercial Debt Recovery So Important to your Business?

If you run a business that sells to other businesses (B2B), then you likely invoice your customers. And, when you invoice instead of expecting payment up-front, you end up incurring account receivable commercial debt. Not all accounts receivables are bad – they're a necessary part of doing business. In such cases, however, commercial debt recovery becomes an important consideration.

Tips for an Effective Debt Recovery

In order to ensure a complete and timely debt recovery, you should consider the following tips:

1. Send out invoices right away, as soon as the purchase is made. Waiting until the end of month is likely to increase your efforts and cost for the commercial debt recovery.
2. Keep your account receivable collection period short. Instead of extending your grace period to several months, make it clear that your business requires payments to be made in full within 30 days.
3. In order to reduce your debt recovery efforts, consider offering discounts if the customer pays in full before/upon the purchase. You can also avoid requirement of debt recovery if the customer pays off the invoice within the specified time period, for instance, 30 days.
4. While deciding how aggressive you should be in commercial debt recovery and collection, consider whether the customer will be a valuable customer in future or not. If you want to maintain good relationships with the customer, consider third-party intervention or diplomatic arbitration instead of aggressive debt recovery.
5. Offer several payment plan options, including pre-pay and pre-and-post-pay options in order to minimize the need for taking third party services for commercial debt recovery.
6. Create a strict commercial debt recovery process and train all of your staff in how it works. You don't want to lose a commercial debt collection opportunity simply because someone asked a low-level employee how much they owe and the employee didn't know.
7. Maintain good relationships between your business and your customer's business to increase the likelihood of getting paid.
8. If a customer is taking too long to pay, use a combination of methods of commercial debt recovery (phone, email, mail) to a combination of people in your customer's company (accounts payable, the finance manager, and even the CFO) to communicate what you owe.
9. Don't be afraid to use a commercial collection agency in order to ensure a complete debt recovery. After all, it's your money and you did all the work and deserve to get paid for it!

Account receivables are an undeniable part of most businesses. However, the payment collection and commercial debt recovery doesn’t need to be painful in order to maintain a healthy cash flow. You should follow the above tips to ensure an effective commercial debt recovery and maintaining good relationships with your customers at the same time.