In Show 102 – Using a Debt Collector with Angela McDonald originally broadcast on Facebook Live on Wednesday 20 June 2018.
You can download the workbook for todays episode here: 102 – Worksheet
Today on the show we’re going to continue our discussion about debt recovery. Trying to recover money that is owed to you can be one of the most frustrating aspects of business. We’ve invited Angela McDonald the managing director of Optimum Recoveries to join us on the show. Engaging a debt collection agency is your last, best option to get the money that you’re owed.
Angela always starts with her clients by insisting they implement really strong terms and conditions for their businesses. Those terms need to be secure without being scary. They don’t have to be onerous to be effective. Along with those terms you need to implement policies and procedures for debt collection. Hand in hand with those policies comes effective training for your employees. Having those procedures in place will help to mitigate the amount of debt that you incur. You want to prevent the debt from every occuring in the first place.
That said, every business is going to have clients who are slow on paying their bills. The goal is to ensure that you don’t rack up huge outstanding invoices. To that end you need to know who you are dealing with. Make sure the businesses you are engaging with a reputable and who do not have a bad reputation for stiffing contractors. If they have had failed businesses or court judgements in the past it doesn’t you won’t work with them. It just means you’ll work with them definitely. Visiting your clients place of work will show you’re interested in them. It will also allow you to get a sense of the health of their business.
When you have clients who are not being responsive to requests for payment you may want to consider a debt collection agent. They have the benefit of costing you money only if they are able to recover the debt. If they aren’t successful then you don’t pay a commission. This can be more cost-effective than having a staff member dealing with outstanding invoices.
The debt recovery process begins with a review of your terms and conditions. What tools have you given the debt collection agent? Next, the agent will review what process has been taken so far to recover the debt. Every client is different. An issue of demand is usually the first step. It sets out the amount owed along with the initial invoice and will include an expected payment debt. That is usually followed up with a phone call to try and get it paid within seven days. A face-to-face meeting may be arrange though those kinds of meetings are becoming more rare.
Before you engage a debt collector you can take some steps yourself. Emails and calls are always a good first step. But if that isn’t working don’t just keep beating your head against a wall. Do something else.
How did you make your first dollar?
Angela would hide in the bushes at the golf course and clean the balls that landed on the fairway and sell them back to the golfers. Her first real paying job was at K-Mart working at the customer service desk.
What book should every business owner read?
If you could give advice to you younger self what would it be?
Sit down and have a good chat with a career counsellor.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.