Most entrepreneurs are aware of the problem of payment gridlocks and unreliable contractors. However, for many reasons they are afraid to start the process of enforcing the payment due to them. Most often they are afraid that in this way they will lose an important customer and the chance to continue cooperation. Attempts to enforce money often end up on calls and polite payment requests.
Although these fears are justified in some way, it is worth being aware that modern debt collection offers us tools that allow us to maintain good relations with the contractor and amicably end the case. However, this does not change the fact that the longer the entrepreneur delays the commencement of debt collection activities, the lower his chances of recovering money are. Why is “fresh debt” easier to recover? When is the best time to start debt recovery? We invite you to read. The debt collection agency can take the right steps in this matter.
When to start debt recovery
First of all – careful monitoring of receivables
Orientation in financial matters and transactions conducted by the company is the basis for starting debt collection activities. A fairly maintained sales register, in which transactions are recorded, information on who and how much has been paid, and payment terms enables identification of a delay of several days. In companies that issue a lot of VAT invoices, such a register is an invaluable help and allows you to quickly find yourself in the thicket of VAT invoices issued.
The tools we use when monitoring receivables are aimed at gently reminding the contractor that the payment deadline is approaching or has just expired. The most common forms of monitoring are telephone contact, SMS and e-mail messages, and written requests for payment. In most cases, we remind the contractor about the need to pay, account number and, if necessary, please contact us by phone in case of any problems or doubts.
Although monitoring of receivables may suggest associations with soft debt collection (link to the text on soft debt collection), it is not the same. It is only when the monitoring activities have no effect that we begin recovery.
Monitoring receivables allows you to build a kind of discipline among contractors, which will avoid problems with their timely payment of receivables in the future. It also shows professionalism and commitment to running your business, and is also the first step to maintaining financial liquidity.
What is insolvency and how is it different from lack of financial liquidity
In order for our debt collection to be effective and, if possible, trouble-free, it should always be started as early as possible. However, to be able to start it, it is necessary to precisely identify VAT invoices whose payment deadline has recently expired. Therefore, reliable monitoring of receivables is the first step to successful debt collection.