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TOP TIPS FOR RECOVERING DEBT - PART ONE

# 1 Be clear on who your customer is

You need to be clear about who owes you the money, so that you pursue the correct person or entity. Is the debtor a company or an individual?

Make sure your agreement accurately records who the customer is.

# 2 Have terms of Trade

If you supply goods or services on credit then you need sound terms of trade to enable you to recover the goods or money owed.

It is essential that terms of trade are tailored to your business, contain a 'retention of title' clause, account for interest and actual legal costs on unpaid amounts, and provide for you to have security over goods pursuant to the Personal Property and Securities Act 1999.

Also- if you are dealing with a company, you should consider requiring a personal guarantee from a company director. This means that if the company has no assets, you can personally pursue the director who gave the guarantee.

#3 Monitor overdue Debtors

Even with small sums, it's important to follow communication procedures clearly and consistently, so that your customer knows there is a process you are sticking to. Don't shy away from making that call.

Accounts less than 60 days due are far easier to collect than accounts that are overdue by 90+ days. By focusing on collecting accounts due 60 days and under, you are likely to maximise your debt recovery potential.

#4 Write a letter of demand

A strongly worded letter of demand is always a good first option. A letter of demand ensures that you get the message across to the debtor, and can show that you are prepared to take legal action to pursue the debt.

#5 Keep records of contact details and all correspondence with the debtor

It is vital that you ascertain contact details from the debtor (customer). Be sure to keep a record of phone numbers, physical address and email.

When communicating with the debtor you need to adequately document your interactions with the debtor. This will be invaluable when it comes to pursuing the debt owed. For example, if you have records that the debtor makes a part payment, or acknowledges that the debt is due and owing, this is all useful evidence to support your claim against them.

Written by Kylie van Heerden, Rebecca Catley at 09:00

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