No-one likes dealing in Bad Debts, and it’s definitely a case of “Prevention is better than cure”.
Cash Flow is important for any business and for Small Businesses in particular, it is often tight. Bad Debts push this even further.
The ATO published a story titled “Protect yourself from illegal phoenix activity. Do you know who you’re going into business with?”. In this article they discuss ways to reduce your exposure to bad debts. Helpful for developing new business relationships, but it wasn’t about day to day processes.
Manage the risk of Bad Debts
Even businesses that are “cash up front”, are still exposed to Bad Debt by broken promises and this risk is increased by offering any credit terms.
Managing your Accounts Receivable in a planned and structured manner can be instrumental. Many small business owners find it tough to discuss payment in person. Important discussions are often missed and any potential issues not managed.
Money is personal and often emotional.
Utilising a service such as Knight BPO to manage the collection of outstanding monies before they become a doubtful debt not only saves time, but stress as well!
At Knight BPO, we work with our clients to put together a structured Accounts Receivable process and execute that process.
Scenario: We have a client with a service-based business. Their standard credit terms are 14 days from service for most customers. The process that we work through for them looks like this:
- Their Knight BPO Customer Service Team calls to check in at the completion of a service, check that all is OK and confirm receipt of the invoice. This is the first check point to make sure they’re happy and all is well.
- We send a pre-written reminder email for debts that are 3 days overdue.
- Should a debt reach a week overdue, a phone call by the client (made by the Knight BPO Accounts Receivable Team) to understand the issues causing the delay and work through a plan to resolve.
- The plan is communicated to our client.
- The plan is actioned by us.
- If there are any issues with the new plan, we contact the client and manage each case individually.
Each and every business is unique and managing debtors is no different! The Account Receivable process is tailored to suit your business. You are involved in scripting the phone calls and emails to make sure they’re representative of your business.
The Knight BPO Accounts Receivable process takes away the stress from collecting money. It takes away some of the more painful tasks of running your business and gives you time to focus on more enjoyable tasks such as earning money – or counting it!