Whether you are a start-up venture or an established business, a bad debt could paralyze your operations and bring your enterprise to a standstill. In many cases, bad debt is the result of customer insolvency or a prolonged default. When that happens, many businesses find themselves in a bad financial position, even without the power to seek legal action against the defaulters. It is, therefore, imperative for business owners, both small and big to devise ways of managing bad debt in their enterprises. For instance, you could learn more about export credit insurance by www.nichetc.com.au.
Based on recent figures, insolvency robs many businesses to the tune of billions of dollars. For example, in the UK alone, the insolvency rate shot by 13% in June 2016. To be on the safe side, here are some ways that you could implement to help you manage debt.
Assess your customers’ credit worthiness
In addition to what you may learn about export credit insurance by www.nichetc.com.au, it is advisable to check credit worthiness of a customer before you engage in any credit deal. It is possible to check the information online. For example, new customers should get a lower credit and you should be able to confirm that they will pay on time.
Set clear terms and conditions
This may require support from professional advisers. Your customers should be aware of the terms and conditions and agree to them. You can make them public on your website. A copy of your terms and conditions should also appear on your invoices and receipts. You may include a clause that states the goods belong to you until the customer pays for them in full. This could help urge your customers to pay promptly.
Have a clear strategy
When a customer delays payment, it is advisable to work with a clear strategy to mitigate debt. For example, you could write off small debts or freeze a customer’s account to prevent further purchases before settling the debt. Click here http://www.nichetc.com.au/
Engage expert advisers
On matters relating to credit finance, it is advisable to seek expert advice. This is important if you have tried to recover your debts with little or no success. With an expert adviser, you could explore other means of recovering your money such as collection agencies. Alternatively, the expert could decide to pursue the debts on your behalf. Debts of small amounts could be tracked faster to pave way for dealing with major balances.
Understand your customers
Finally, yet importantly, it is advisable to understand your customers and set appropriate credit limits. It is also advisable to keep a ledger book, which you should inspect regularly to determine any warning sign that may lead to bad debts. Customers who are having difficulty in paying in a lump sum could pay in small bits that they are able to manage.
Dealing with bad debt requires proper planning and expert advice. With the tips mentioned here, you could be able to minimize the chances of falling into the trap. For more information on export credit insurance by www.nichetc.com.au, visit the website shown here. For more details, just visit at http://www.nichetc.com.au/