# 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
Make sure your agreement accurately records who the customer
# 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
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
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.