Did you know that over half of small businesses are owed money by their customers? In fact, the latest studies show that most SMBs are owed around $17,500 in total.
It’s hardly surprising that as many as 20% of small businesses fail to survive their first year. Starting is hard enough without the risk of missed invoices. Worse, many budding businesses simply don’t know what to do when a client ghosts them.
Debt management processes are key to overcoming this problem, and could include improved invoice tracking, communication protocols, and partnerships that lead to legal action as a final resort. But, considering that these things can take time and even money, why are they worth your while? Keep on reading as we find out.
# 1 – Communication That Keeps Your Reputation In Tact
If you have no debt management plan in place, then you’re more likely to let your emotions get the better of you. This is your livelihood, after all. It inevitably hurts when customers don’t respect that. But remember: your reputation is at risk if you start sending emotive or harassing emails. Aside from making it harder to seek legal recourse down the line, a debt collection process that sits outside of protocol could lead to shaming bad reviews.
By comparison, a debt management process that outlines when and how you should contact the recipients of outstanding invoices ensures that you play by the book. This clear process can also help you to stay calm, ensuring that every email remains professional and far less likely to result in reputational backlash.
# 2 – Structured Payment Plans That Suit Everyone
Debt escalations can feel negative, but that’s not always true. While getting a third party involved can feel unpleasant, it’s actually often the best way to keep both sides happy, especially if you seek the help of a company that deals in debt relief as well as debt collection.
After all, as National Debt Relief CEO Alex Kleyner points out, debt settlement is by no means deserving of its bad reputation. Instead, this is an approach that keeps everyone’s needs in mind. For your company, it’s beneficial because it ensures you get paid sooner. For clients who are genuinely struggling to pay, it can lead to much-needed support and achievable repayment plans.
# 3 – Reducing Write-Offs
A write-off happens when a business accepts that a payment’s not coming. Unsurprisingly, this is common for companies that don’t have debt management processes to fall back on. But it’s a problem that you can pretty much eliminate by getting on top here.
After all, with the right communication processes, you make it way more likely that you’ll receive payment after a first warning. The threat of legal action, and the eventual legal action itself, can also serve as a great way to secure outstanding payments for the sake of your business growth and survival.
For these reasons and more, we urge you not to forget the importance of debt management processes as you build your business.