After I divorced from my wife, I needed to start building my finances back up again. I have started this website to show people how you can save money and invest it sensibly after your divorce. You will not be able to get rich overnight, but by taking a long term view you should be able to get your finances in order and buy a new house or other things like that. I want my kids to know that I am doing OK financially and I want to make sure that I can keep giving them the lifestyle that they deserve when they are with me. I am sure you want the same things.
If you have some small debtors who are very slow to pay, you may be wondering if it's worth your while to continue to chase them for payment. However, as a small business, cash flow is paramount. Here are some of your options to manage these small debts.
Write the debt off
If your current debts are small but you hold some confidence that this business, or relationship, may be key to some future business, you may be tempted to write the debt off. This means that you will no longer chase the debt and will simply claim a deduction for the amount. This can be a time effective technique as it requires no further effort on your end but it's also the least effective for your profits.
Attempt to chase the debt yourself
You can also try corresponding with the company further and continue to regularly call and deal with the company. This can be a very time-consuming approach, especially if the debts are relatively small. However, it does set a good precedent in your market that you will chase any unpaid debts, which may help your accounts receivable payments overall.
Send a sternly worded letter
Many debt collection agencies offer an initial package where they can send a sternly worded letter asking for payment, or they allow you to use a template to send your own letters to debtors. These letters can often help to prompt payment where the underlying issue is disorganised accounts or lost bills at your debtor's end. This can take a little more time to organise, but is not overly time consuming or expensive and can often prompt a percentage of debtors to pay up.
Engage a debt collection agency
You can also engage a debt collection agency. You can either pay an upfront fee, along with a percentage of the collected debt ,or you can engage them on a 'no win, no pay' basis where they do not charge an upfront fee but take a higher percentage of any money that they recover. This can be time consuming when initially engaging the agency but is less work overall than chasing the debts yourself and can often result in a higher payment rate because they have the time and experience to chase down the debts.
If you have small debts that are still owing, then it makes sense to consider both your ongoing relationship with the debtor and the time you can commit to chasing payment.Share