In business you get what you want by giving other people what they want. All you need to do – listen well!
Let’s take a look at some signs and symptoms that may be early indicators of bad debt problems. Observing these early signs and investigating courses of the following symptoms, may save you from unwanted expenses in money and time. Additionally, you can avoid the accompanying related problems down the line. Be watchful for the following signs, and be especially vigilant if you see a cluster of signs in your business.
- Gradual Increase of Bad Debt
Overdue accounts are quite common in many businesses and can be attributed to a variety of factors, one of which is poor internal administration processes and procedures. The success of our sales or services is very much connected to the business internal administrations processes and procedures. If these processes are not properly defined, systemised and synchronised, they influence the end sale and business productivity outcome, with bed debt increasing gradually. Pay attention to aging of your debt month by month and constantly compare the numbers. A gradual increase is a bad sign signalling need for action to change something in your business. Prioritise collections, calling and following up your clients, increase your time spent on debt collecting, and try to gently re-train your clients
- Increase of queries over your Business Terms & Conditions
It might be hard to believe, but in reality many small businesses have not incorporated functional and professional invoices, often with basic required information lacking. If your Payment Terms & Conditions are not visibly displayed, or even completely lacking on your official paperwork, how do you expect your clients to follow up on prompt payments? Increased number of queries from your clients regarding the business terms & conditions is a sure sign that you should go look for your business problems internally. Review your Terms & Conditions, your invoices and statements and make sure your terms are clearly displayed and visible to your clients. Make a regular yearly review of your Business Terms & Conditions a part of your yearly must check list.
- Increased number of complaints when trying to collect debt
A well known rule of thumb in client services is that for every client that makes a complaint – another 9 walk away from your business silently and tell their complaints to everyone else!!! A smart business would have a developed system that tracks ALL complaints, specifically including complaints received when you try to collect debt. People are sensitive creatures and if they do not think that the product or service received matches the charge, they complain. Of course, it is most often to the person that tries to get the payment – debt collectors!!! Go back to the complaints list and find out what the 5 most common reasons for complaints your clients are giving you. This is a great insight for your business. It can pinpoint problems, staff members or departments that need attention, or area in your business that needs adjustments and further development. This new insight might prompt you to change your approach to your client, your products and services or to your business in general.
Watch out for Part 3 of “Early Warning Signs & Symptoms of Bad Debt from inside your Business”
Missed our Part 1 posting? Go to Part 1