Question

12-14 Suppose you work for a small local department store that manages its own accounts receivable with a private charge card. Your boss has told you to improve the average collection period from 30 to 20 days. How would you go about this? What are the risks in your proposal that might affect the company negatively?

Answer 1

6 Ways to reduce your creditor / debtor days

1. Negotiate payment terms with your suppliers. Initially, you choose your suppliers based on your specific need, whether it's speed of delivery, quality of product or simply price.
2. Offer discounts for early repayment.
3. Change payment terms.
4. Automate credit control, set up chasers.
5. External credit control.
6. Improve stock control

Thanks & Regards

Shankey Gupta

#8171983218

Accounts & Finance

Rivigo Services Private Limited

We Keep it Professional

The debt recovery process is regulated by the Debt Collection Act and we practice diligently within the guidelines and regulations stipulated in this act.

Trying to collect outstanding debt can be frustrating and emotional, especially for small business owners who require timeous payments to maintain a healthy cash flow.

High emotions can often lead to irrational decisions which may result in an illegal attempt at collecting debt and can have major detrimental effects on your business.

As professional debt collectors, we operate from an objective stance and according to a strict code of ethics.

We ensure that a good relationship between the debtor and business owner is maintained throughout the entire collection process.

Maintaining a good relationship with your clients is a crucial part of running an ultimately successful business.

We have special tools

There are times where an indebted customer becomes impossible to contact. Perhaps they’ve blocked your number or changed theirs.

Whatever the reason, trying to get hold of someone who has deliberately made themselves uncontactable can be impossible if you don’t have the necessary resources.

As a registered debt collection agency, we have access to databases as well as other tools and methods of tracking down debtors who have gone MIA.

We keep records

There is nothing more important than a paper-trail of communication should you land up taking your debtor to court.

Of course, we make every effort to avoid court cases, but when someone simply refuses to pay their debt, this may be the only option.

In this case, we keep record of every phone call, email, letter or visit to your debtor as proof that every legal measure was taken to collect.

The receiver of revenue will require these documents before they decide to reimburse deductions from your tax. They want to see that you have exhausted all your option and were left with no choice but to cancel the debt in question.

We increase your chances of recovering debt

As a business owner, you want to place all your focus on your operations. Our function as a debt collecting agency is to collect debt.

Effective debt collection is what we do. By using an agency to collect debt, your chances of recovering your debt are immediately improved.

By default, debtors are likely to take phone calls received from debt collectors more seriously than from a small business owner.

The result is that your debt is effectively recovered and your average debt collection period is improved.

We let you focus on your business.

Debt collection is often a tedious task which consumes valuable time that could be spent on more important aspects of your business.

The debt collecting process requires frequent phone calls to the debtor and as the accounts get later, the frequency of calls should increase.

As a business owner, whether small or big, there simply is no time to spend on making phone call after phone call.

Hiring a debt collection agency will free up an incredible amount of time for you to spend on the things that need your attention.

7 Signs Your Business Needs a Debt Collection Agency

• Empty promises and partial payments

When a debtor keeps promising to pay but never does, or only offers partial payments instead of the full instalment

• Your debtor has gone MIA

They are avoiding payments by no longer answering or returning your phone calls or emails

• Your debtor is disputing the debt

Difficult debtors may dispute the validity of the debt in question and going over all the documentation to support your case is extremely time consuming

• Your debtor is a con artist

You have found yourself head to head with a seasoned con artist who knows exactly how to evade paying their debts

• Things have become emotional

After several phone calls and attempts to recover the money owed to you, some debtors may become volatile and difficult to communicate with

• Your debt is aging

The longer you wait to collect your debt, the less likely you are to be successful

• You simply don’t have the man power

Especially for small businesses, there may not be enough man power available to designate a special team for debt collection

How to Improve Debt Collection Period

To start off with, there are certain things a business can do to prevent the accumulation of bed debt. Although it’s not always possible to guarantee that a debtor is going to pay on time every time, there are ways to improve the likelihood:

Do a background check and credit review before presenting the customer with their payment terms

Draw up a contract as well as a credit application and have it signed by the customer as part of their terms

Make sure you invoice promptly and accurately to avoid any delay or disputes

Follow up on the day after payment was due if it was not paid

Acknowledge when matters are becoming out of your control and seek assistance from a collection agency sooner rather than later

Able Tracers – Debt Collectors in South Africa

We operate within the confines of a strict code of ethics and adhere to professional and legal standards throughout the entire debt collection process.

Through effective debt collection, we strive to be one of the best debt collection agencies in South Africa.

We do more than make a few phone calls. We provide comprehensive collection services for you or your business.

To find out more about the services we offer and how we can help you improve your debt collection period, please feel free to contact us today.