Business owners and/or managers are now faced with the greatest risks of operating a successful and viable business today more than has been the case in recent times. Today, many businesses are fighting a losing battle to protect their assets and businesses because their rights are being progressively destroyed. The businesses particularly in trouble are those which offer credit facilities in the B2C and B2B environments.
Effective Debt Collection is crucial for business survival.
If you believe the above statement is a bit over the top, you are probably not in business and or are in one of two groups who don’t have to pay personally the financial and emotional cost of their thoughts and actions.
There are many negative factors facing business today. One critical factor in the destruction of creditors’ rights, which seems to be increasingly supported by government and people with vested interests. This has resulted in the unfortunate situation where:
Debt Collection has become a vital aspect for many businesses fighting for their rights.
1. badly run businesses can avoid paying suppliers invoices and can be excused of their debts because creditors are denied an inexpensive process to exercise their rights,
Businesses must understand the importance of Debt Collection to ensure they receive payments.
Understanding Debt Collection Strategies
Why Partnering with a Debt Collection Agency is Essential
2. B2C and B2B customers can easily avoid their debts and get away with fraud, and
Implementing Debt Collection strategies is essential for B2B and B2C companies.
3. properly run business doing the right thing and acting responsibly to collect their debts in a timely manner, are penalised by preferential payment legislation.
A strong focus on Debt Collection can protect responsible businesses.
The first of two groups responsible for a loss of creditor rights are the do-gooders of society and those who have never operated or managed a business. These people have good intentions and feel sorry for people who have paid the price of their own bad decisions or have lost everything because of no perceived fault of theirs.
The second group are those who operate in the protected worlds of a political organisation, a government bureaucracy, or with associated vested interests which allows them to avoid the adverse effects of their actions which they inflict on others.
In the B2B commercial world, delinquent debtors are being given every opportunity to avoid their responsibilities by the Courts via increased costs and the insistence cases go through a pre-mediation process before an actual court hearing. All too often, this process supports the delinquent debtors’ interests and increases the costs to the creditor.
With the right approach to Debt Collection creditors can safeguard their interests.
In addition, if the creditor should go through another form of recovery action, i.e., through QCAT in Queensland for example, the delay in hearing the case due to insufficient staff, just allows the debtor to further avoid their responsibilities.
From another perspective, as many in the business community know, even if they are prepared to go through the legal process, the Courts have no responsibility to force the losing debtor to pay their debts. In turn, alternately, many businesses are going to make the decision that it is not worth their while to offer B2B credit, just like the banks are already doing. As a result, the unintended consequences means that usually the start-up businessperson, or the small business operator, will suffer due to a lack of affordable finance.
The lack of effective Debt Collection practices can deter businesses from offering credit.
Yet another example, is when businesses pay for the costs of creating professional and legal terms of trade. Unfortunately, now it appears many of these terms designed to protect the creditor in the event of default, are increasingly being limited to the detriment of the creditor. This is not withstanding the fact that these terms and conditions when signed off by customers, are responsible adults who claim to have read and understood the documents they have signed.
Understanding Debt Collection is key to ensuring agreements are honored.
Finally, for this article, let’s talk about the effect of preferential payments refunds and those businesses that maintain an up-to-date process on making sure they are paid within terms agreed upon by the customer. If the customer subsequently goes into an insolvency administration, suddenly the business can be told to refund funds already collected in “the normal course of business”. This is yet another negative against those businesses which operate properly. Unfortunately, we see little evidence that the old legislation is being challenged because it is now so out of date these days. The fact is today; creditors are constantly reminded they need to collect funds from outstanding invoices to maintain cashflow.
Businesses engaged in Debt Collection must remain vigilant against refunds.
Today’s business owners and/or managers are now faced with the greatest risks of operating a successful and viable business like never before. Today, many businesses are fighting a losing battle to protect their assets and businesses because their rights are being progressively destroyed. The businesses particularly in trouble are those which offer credit facilities in the B2C and B2B environments.
The need for effective Debt Collection has never been more pressing.
The unfortunate and unintended outcome for all concerned, businesses and customers, will be the lack of affordable finance to progress their lives. I say affordable income, because there will always be organisations, or other parties, which are not bound by legislative and legal niceties, which will offer finance at higher rates.
Debt Collection is essential for maintaining stable financial operations.
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