4 Best Ways to Speed up Debt Collection from Customers

Updated: Oct 5, 2021

Sometimes, giving on credit to customers may be unavoidable in business.

It is true that giving goods or services on credit to people may be detrimental to your business, especially because there is a possibility that these people will not pay back.

However, to boost customer retention, some business owners often resort to giving out their goods and services on credit. The customers they choose to give out this credit to are sometimes known and trusted, but this does not take away the fact that a situation may arise where the customer and/or the business owner may forget about this debt.

It is critically important for a diligent business owner to have a record of every debt no matter how small. This is because as they usually say, “small drops of water make up an ocean”. For instance, if you give and forget a debt of N100 to 30 people in a month, this amounts to N3,000. Similarly, if you give and forget £10 to 30 people, the total is £300. Although, the N100 or £10 is a small amount, the total amount is huge loss to the business.

As such, it is important to be conscious of the debt you give out to your customers.

These four strategies will assist you in your debt collection process, and also retain your customer base at the same time.

  1. Do your Research: It is important to know the person you are giving on credit to. Although, this does not mean conducting full research on the person, as that might have an adverse effect on your business. Know details such as their names, addresses, phone number, and friends or partners.

  2. Document the Transaction: Even if you do not have the resources to give receipts, invoices, etc., you can take a picture of the person holding the product, or have the person sign a simple IOU (I Owe You) paper.

  3. Develop a Collection Plan and Stick to it: To create a structure in your business, you can create a collection plan. For example, every evening before close of business, you organize all debtors and the transaction. Also, every Monday of the last day of the month, you call to ask about the money you are owed. Remind them about their commitment and show them proof of the debt. You may also choose a mode of communication, whether by call or text messaging. Make sure you choose a structure that you are sure works for you.

  4. Keep Communicating: Even if the debt is weeks away, make sure you are in communication with your customers about your debts through subtle reminders. This way, you can collect your debts faster.

Pesabook has a system that helps business owners document research, store the documentations, ensure communication to the debtors, and generally speed up the debt collection process. Are you a business owner? - Use Pesabook today!

Thank you for reading this piece! We hope it helps you succeed in your business!

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