Small Business Guide - Small Business Resources
    (Add to Favorites  |  View All Articles  |  Resource Directory)

Collect that Debt - Your Business Depends on it


The efficiency of debt collection is the difference between a business that will succeed and a business that closes up.

If you do not have control of your debt collection then you will eventually fail. All businesses that grant credit will be faced with the problem of bad debt at some stage. The best way to deal with bad debt is to have a good debt control system in place.

There are three types of bad debt:

  • Can pay.
    This is where your debtor can pay but will drag out non-payment as long as possible. They do intend to pay but only at the last moment.
  • Can't pay.
    This type of debtor have no means of paying the debt either momentarily or ever. They are not necessarily avoiding payment but do not have the means to do so.
  • Won't pay.
    This type of debtor is the worst. They will try to get away with not paying, know the debt collection routine and will not pay until the matter goes either to court or through a debt collection agency.
  • The solution to this is to get your money when it falls due or have a collection procedure that does not let your debtors get away with anything. Once you stop chasing the money that is due to you the amount owing to you will increase. The longer you allow a debt to remain unpaid, the less chance you have of recovering it.

    There are three ways to collect debt:

  • By yourself.
    This is the least costly method and involves phoning the debtor, sending letters and as a last resort, going to court to have the debt paid.
  • By a lawyer.
    This involves having your lawyer send letters of demand before it is taken further. A fee will be charged dependent on how long it takes for the debt to be recovered. If going to court is involved and your debtor is forced to pay you through a court order your legal fees could be recovered. However if not, then you will have to cover the court costs as well.
  • Debt collection agencies.
    These are firms such as Baycorp, who specialise in the collection of debts. A percentage of the amount collected is taken as a fee. If the debtor does not pay the debt it will usually affect their personal credit rating.

  • Copyright 2005 StartRunGrow
    http://www.startrungrow.com

    StartRunGrow (http://www.startrungrow.com) is a global online information organization that specializes in creating, developing and marketing business help information specifically with the aim of "making business easier" for entrepreneurs around the world. The StartRunGrow objective is to become a dominant player in the business help arena providing end to end solutions for the millions of small and medium businesses worldwide who continue to struggle daily with the difficulties of starting, running and growing a successful business.


    MORE RESOURCES:

    News provided by Yahoo! News and Google News

    Smallbiz Brain Presents America’s Best Companies - PressReleasePoint (press release)

    Smallbiz Brain Presents America’s Best Companies
    PressReleasePoint (press release), India - Jan 7, 2009
    Heard across the United States and in more than 80 countries, the Smallbiz America Network presents “The Smallbiz Brain” to introduce influential guests ...

    $1M goes to Mass. small biz supporters - Bizjournals.com

    $1M goes to Mass. small biz supporters
    Bizjournals.com, NC - Dec 29, 2008
    The Mass. Office of Small Business and Entrepreneurship has awarded $1 million to 25 business development non-profits. According to a news release, ...
    State Gives $1M For Small Biz Growth Worcester Business Journal
    all 7 news articles

    Poll: 25% of small-biz owners worry about survival - Bizjournals.com

    Poll: 25% of small-biz owners worry about survival
    Bizjournals.com, NC - Dec 29, 2008
    One in four small-business owners fear their companies may not survive the recession, says a poll conducted by the National Federation of Independent ...

    26% of Small Biz Raises Ad Spend, Precipitating Online Growth - Marketing Vox News

    26% of Small Biz Raises Ad Spend, Precipitating Online Growth
    Marketing Vox News - 7 hours ago
    97% of US small business owners are concerned about the economy, but 26% nonetheless plan to spend more on advertising — especially online. ...

    US Celcos Urged To Create New Small-Biz Programs - Telecomweb

    Apple Reworks iWork for Small Biz - bMighty.com

    Apple Reworks iWork for Small Biz
    bMighty.com, NY - Jan 6, 2009
    Just about the biggest small-business news out of Apple at Macworld Expo — which opened today in San Francisco — is a whole lot of improvements to its iWork ...

    home | site map | articles
    © 2006