HOW TO PREVENT SITUATIONS WHERE DEBTS ARE UNCOLLECTIBLE

This time, here are six steps that will be useful for you as an entrepreneur in your practical work with customers (debtors) to prevent situations where debts become unrecoverable and subject to corporate income tax.

#1 Prepare a contract that is favorable to you

Develop an acceptable contract template and—regardless of other circumstances—conclude written purchase and sale agreements with regular customers!

On a rainy day, these will help you understand the basic terms of the transaction—identifying the partner, recording contact details and authorized persons, defining the transaction structure, and, most importantly, the payment terms and penalties for late payments.

Motivate the customer! Provide terms where, if the customer pays within 1–3 days after the transaction, you grant them at least a symbolic payment discount (usually 2–3%). This will greatly increase the customer’s desire to cooperate with you in larger volumes.

By the way, supermarkets that exploit their position tend to issue a 3% invoice if you want to receive payment from them in less than 90 days. That happens too…

If there is a contract and a dispute arises with a buyer regarding debt payment, any lawyer you hire to help recover the debt will be grateful to you.

#2 Offer prepayment terms

When working with one-time customers and clients, do not allow post-payment terms! Always issue an  advance invoice before the transaction and wait for its payment, verifying it yourself. Check your bank account before issuing a waybill for goods or an invoice for services and delivering the respective goods or services.

#3 Remind them of the payment deadline

As the payment deadline specified in the contract approaches, ensure that the sales manager sends a polite reminder to the customer—usually to the responsible person via SMS or email.

#4 Send words of gratitude

If the customer has paid on time, ensure that the sales manager sends sincere words of gratitude! This is especially important at the beginning of the cooperation, as it creates a psychologically pleasant atmosphere and a feeling that the customer is valued.

#5 Remind them of the delay

If the customer slightly exceeds the payment deadlines specified in the contract (usually 3–5 days), ensure that the sales manager sends a slightly more direct reminder to the customer regarding the late payment, granting an additional grace period of 2–3 days to clear the debt without any penalties. This works because, in 90% of cases, such late payers pay their invoices immediately after such a reminder.

#6 Gently threaten with debt collection

If none of the above-mentioned debt monitoring techniques work and the delay reaches more than a month, consider starting a partnership with a debt collection agency—preferably a local one, as they are more flexible in their approach. If a payment delay lasts more than 2 to 3 months, the chances of recovering such a debt usually decrease sharply…

Entrepreneur, be responsible in working with your debtors! This will promote the sustainability of your business.

By the way… Understanding that an entrepreneur’s true element is closing deals, we offer this debt monitoring to our clients as an additional service.

If you need assistance with accounting matters, please feel free to apply on our website and receive a favorable cooperation proposal! Our team will rush to your aid!

By applying for the service on our website, you will receive a free solution
for the transfer of accounting data to make starting cooperation with us more convenient. You will also receive
a 2-hour free consultation on how to improve your business operations!