Debt recovery is a significant issue for small businesses, particularly when slow or non-paying clients are involved. At Aspect Legal, we’ve seen an increasing number of SMEs grappling with debt recovery recently and feel that it’s high time for a reminder of the best approaches.
- The first step is to keep your finger on the pulse. Ensure that you have a system in place that enables you to quickly identify any problem payers. This will allow you to take action quickly and minimise the risk of outstanding debts.
- Secondly, you need to have a rigorous follow-up system in place. This should include template follow-up letters, phone call scripts, and clear points of escalation if reminders, emails, and phone calls aren’t working. Having a clear and consistent process in place will help you stay on top of outstanding debts and demonstrate to clients that you take debt recovery seriously.
- Once you’ve hit the escalation point, it’s crucial to act quickly. A letter from a lawyer at this point can often resolve the issue, but only if you haven’t let it sit for too long. Delaying action can give the impression that you are not serious about debt recovery and may embolden the non-paying client to continue to avoid payment.
Finally, if all else fails, it’s essential to consider getting serious. There are a number of legal options available to small businesses when it comes to debt recovery, including issuing a Statutory Demand or commencing legal action. Seeking legal advice early in the debt recovery process can help you to make an informed decision about the best course of action for your business.
Debt recovery can be a significant challenge for small businesses. However, by keeping your finger on the pulse, having a rigorous follow-up system in place, acting quickly once you’ve hit the escalation point, and considering legal options where necessary, you can minimise the impact of slow or non-paying clients on your business, and keep cash flowing. Aspect Legal assists businesses with all aspects of debt recovery, from helping to set up cashflow and debt recovery systems, through to early intervention and legal action where required. Click here to set up a call with our legal eagles to discuss how we can help you.
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