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Collecting Cash and Managing Debt

Published 01 Jun 2009

In the current economic climate, nothing is more important than getting paid for what you do.

Surprisingly, there are very few companies in existence that have a formal, written system for 'getting the money in'.

Given the importance of being paid for products and services it makes good sense to have a structured and formal method of collecting accounts.

There are some horrifying statistics available suggesting that eighty-three percent of all businesses starting up today will not be here in five years. They will not necessarily go into liquidation or receivership they will simply close. They have failed. And if there's one major contributing factor that surfaces time after time, inquiries reveal that lack of funds causes most of those closures.

The Five Rules: A Summary
There are many steps businesses can take to ensure that sales of products and services are paid for on time. The suggested steps come from five important rules. They are:

1. Originate a system that clearly states what your terms and conditions are. Everyone in your organisation must fully understand the payments system – that is the way you ensure you get paid for what you do.

2. Communicate the terms and conditions by informing all your staff and your customers of your terms and conditions - before you trade with customers and while you trade with customers - and keep doing it, loudly and clearly until you are paid.

3. Be persistent and keep continuous contact with the debtor. Don't let them ignore you.

4. Be clear, firm and polite and begin collection negotiations as the 'Nice Person' and continue being nice until you decide you will be better off without the client- then take legal action.

5. Take a 'charge' over the goods by registering a security over goods with a value (of an amount of money) that would seriously affect your business if the buyer did not pay you in full. You must decide what that amount is.

This and more infomation is available in our How to Collect Cash and Manage Debt eBook. Employer Support Package members please take the time to read this in the Library section of the Employers Toolbox online, others maypurchase online.