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OVERCOME THE TOP 3 OBSTACLES IN DEBT COLLECTION

In Belgium, about 2% to 6% of invoices are unpaid on due date.  These figures vary from one to another type of trade.  About 15% of these 2%-6% are late due to solvency issues with the debtor.  For the remaining 85%, reasons are wide-ranging.

Debtors are too often associated with disloyalty.  However, bad faith is still limited to a minority.

We get only overdue debts. And sometimes, we can’t collect them.  For some clients we fail only for a few debts in a hundred; for others it is closer to half of the claims that are unrecoverable. Why? Our statistics show why we fail: 36% of failures on the receivable we get are due to the fact that the creditor doesn’t want to go to courts because the amount is too small or the issue uncertain; 20% because we can’t locate the debtor; 12% because of a lack of documents; 9% because of bankruptcy; 7% because the debt is disputed. The last 16% are because the creditor requires us to stop the collection process.

The creditor can minimize problems by addressing simple facts.

Claim documentation

Lack of documents to prove the debt makes amicable collection more difficult.  Debtors are not always very good at administration or are keen to get some more time to pay. They ask us for copies of invoices, order forms etc.  If we can’t provide these within days, we reduce our chances to solve the claim amicably.  If we can’t produce such proof at all, our chances vanish.

To do: Make sure that you keep adequate documentation from the signed order up to signed delivery receipt so as to prove that you acted according to your client’s order (your debtor’s request).  For some types of trade, a signed order or delivery voucher are inadequate.  See how you can insert some proof in your process (like flow charts of your process, mail read receipt, voice recording, pictures, etc.). Make sure that you have all elements to accurately identify and locate your client (exact name, address, id/vat number, phone, email, etc.; as appropriate).

General sales conditions

When an invoice is overdue, it entails additional work. It doesn’t matter why it is unpaid, debt collection means additional costs.  Such costs need to be paid by those who cause it, otherwise, you’ll need to increase the price of your goods and service, hence you’ll be less competitive.

To do: Draft adequate sales conditions about what happens if the invoice is unpaid on due date.  Make sure that your clients (incl. your debtors) have somehow approved these conditions and that you can prove it.

Address disputes

Disputes mean additional work. But in the long term, handling disputes reduces your workload. Indeed, knowing what your clients dispute allows you to reduce such occurrence. Handling disputes professionally also reduces bad debts significantly!

To do: When a dispute comes in, acknowledge it with your client, address it, inform your client about your decision, make the necessary adaptation (including a credit note as the case may be). Then modify your process if appropriate.

You wish more details on what we can do to get your receivables paid?  Check our websitemail us or contact us!

OVERCOME THE TOP 3 OBSTACLES IN DEBT COLLECTION

In Belgium, about 2% to 6% of invoices are unpaid on due date.  These figures vary from one to another type of trade.  About 15% of these 2%-6% are late due to solvency issues with the debtor.  For the remaining 85%, reasons are wide-ranging.

Debtors are too often associated with disloyalty.  However, bad faith is still limited to a minority.

We get only overdue debts. And sometimes, we can’t collect them.  For some clients we fail only for a few debts in a hundred; for others it is closer to half of the claims that are unrecoverable. Why? Our statistics show why we fail: 36% of failures on the receivable we get are due to the fact that the creditor doesn’t want to go to courts because the amount is too small or the issue uncertain; 20% because we can’t locate the debtor; 12% because of a lack of documents; 9% because of bankruptcy; 7% because the debt is disputed. The last 16% are because the creditor requires us to stop the collection process.

The creditor can minimize problems by addressing simple facts.

Claim documentation

Lack of documents to prove the debt makes amicable collection more difficult.  Debtors are not always very good at administration or are keen to get some more time to pay. They ask us for copies of invoices, order forms etc.  If we can’t provide these within days, we reduce our chances to solve the claim amicably.  If we can’t produce such proof at all, our chances vanish.

To do: Make sure that you keep adequate documentation from the signed order up to signed delivery receipt so as to prove that you acted according to your client’s order (your debtor’s request).  For some types of trade, a signed order or delivery voucher are inadequate.  See how you can insert some proof in your process (like flow charts of your process, mail read receipt, voice recording, pictures, etc.). Make sure that you have all elements to accurately identify and locate your client (exact name, address, id/vat number, phone, email, etc.; as appropriate).

General sales conditions

When an invoice is overdue, it entails additional work. It doesn’t matter why it is unpaid, debt collection means additional costs.  Such costs need to be paid by those who cause it, otherwise, you’ll need to increase the price of your goods and service, hence you’ll be less competitive.

To do: Draft adequate sales conditions about what happens if the invoice is unpaid on due date.  Make sure that your clients (incl. your debtors) have somehow approved these conditions and that you can prove it.

Address disputes

Disputes mean additional work. But in the long term, handling disputes reduces your workload. Indeed, knowing what your clients dispute allows you to reduce such occurrence. Handling disputes professionally also reduces bad debts significantly!

To do: When a dispute comes in, acknowledge it with your client, address it, inform your client about your decision, make the necessary adaptation (including a credit note as the case may be). Then modify your process if appropriate.

You wish more details on what we can do to get your receivables paid?  Check our websitemail us or contact us!

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