As a result of rapidly-changing technology, regulations, and demographics, commercial debt collection faces a wide range of challenges. The highly mobile society we live in today makes it more difficult than ever to find and locate debtors. Although there is a surplus of information available on individual debtors, it can be almost impossible to sort it effectively.
In the same way, debt collection for small businesses can be even more challenging. The resources of a smaller organisation don’t allow them to invest in an expensive debt collection infrastructure. Such a company needs to invest in cost-effective tools and procedures to collect money from overdue customers.
Recently, eCollect surveyed its collections clients to discover the most pressing debt collection challenges currently confronting them and especially small businesses. Some of them are listed and explained below:
Dealing with debtors
Having tricky conversations with debtors can be particularly daunting, especially if it’s not a regular part of your life. In addition, many find debt collection challenging because of the risk of ruining relationships and losing rapport with customers.
Small businesses also often lack experience in conflict management or lack fluency in the type of language to use. We hear a lot from small debt collection clients who feel they’ve put their foot in it in their debt recovery conversations, and they feel relieved after handing over the problem to us.
Lack of resources and time management
Despite the best intentions, small businesses often lack time to follow up on debts. The pursuit of delinquent customers and getting them to pay can entail a lot of uncomfortable conversations, so some may think that it is better to burn their time elsewhere than to follow up on their debts.
Moreover, attempting to do everything yourself is far from being the most effective way to use your time. Invest in adequate resources now if you don’t have them to collect debt promptly.
Business failures of customers
You may not be able to predict when a customer or their business may become insolvent. Even though customer bankruptcy is not an everyday event, it is relevant to consider due to today’s volatile environment. It can be particularly painful if you have customers with large balances owing.
When a small business fails, you’ve got to ensure that your chances of debt recovery are as good as possible.
Having little experience managing conflicts
As most businesses can’t handle the anxiety it brings, it’s difficult to negotiate with people to pay their debts, especially if your business is just getting started. Small businesses are beleaguered by the fear of losing potential clients and customers.
Generally, small businesses do not have any experience in debt collection or conflict management. The development of processes and empowering your team to do this is an important part of your business. You should also know when to stop chasing up delinquent customers and seek professional help instead. Here’s where debt recovery agencies (like us) can help.
Chances are that when you get emotional, you will give the debtor an excuse to not pay you.
Get professional help when collecting debt in Australia
If you are a small business owner, manager, or employee struggling with debt recovery in Australia, you are not alone.
You can remove one of the biggest impediments from your to-do list by working with a professional debt collection agency. eCollect looks at the big picture and strengthens your credit system, so that debt recovery is rarely needed.