Bad Debts are not so Bad

http://businessiqnetwork.blogspot.com/2011/06/good-bad-and-ugly-debt-by-alfred-ade.html

Every decade or so, there is an economic downturn. Economic downturn is a natural cycle. When the economy is diving, it sweeps many people and make holes in their pockets.

Bad debts are a by-product of everyday credits dealings and it arises as a favour bestowed on one party by another.

90% of the debts could be collected when there is a consistent preliminary collection action. So Bad Debts are not Bad unless it was ignore.

About ¾ of the uncollected debts are due to unforeseen circumstances, while almost ¼ is caused by poor collection methods and the remaining due to faulty credit granting.

A proper approach to bad debts will lead to success in the recovery of the accounts. A collection policy formulated is good for everyone. Instead of hesitation on the type of approach to use, making an appraisal of recovery potential is helpful when debts are classified as ‘slowly recoverable’, ‘settlement possible’, ‘settlement improbable’ or ‘irrecoverable’.

Collection tools and the time to make contact with debtors enable debt collecting process easier.

For a reluctant debtor, there are 5 questions to keep in mind.

1.      Will they pay ?

2.       When will they pay ?

3.       How will they pay ?

4.       Why won’t they pay ?

5.       How can they be made to pay ?

Do not forget,

‘You will catch more flies with a spoonful of honey than a cask of vinegar’ – Eastern Proverb.