Unpaid debt and overdue invoices can cripple any business, affecting cash flow and undermining your financial stability. While debt collection agencies and legal advice are options, prevention is often better than cure. Here are five steps to protect your business from future unpaid debt, along with how Debtor Protect’s specialized services can offer you an added layer of security.
1. Know Your Debtor: The Importance of Due Diligence
Before you extend a credit limit to a new customer, it’s crucial to know who you are dealing with. Conducting due diligence will protect your business against bad debt and untrustworthy business partners. Always check ASIC guidelines and consider third-party reviews.
How Debtor Protect Helps: Debtor Protect’s Debtors Insurance or Trade Credit Insurance offers a robust safety net, underwriting your financial risks when trading with new business partners.
2. Have a Signed Contract: The Legal Shield
Putting every business agreement in writing through a signed contract can be a lifesaver in the event of a dispute over unpaid debts. Make sure that payment terms are clearly defined to minimise issues related to late payments or debt recovery.
How Debtor Protect Helps: While Debtor Protect specializes in credit insurance, aligning your contracts with legal advice and ASIC guidelines enhances the scope of protection, ensuring that you are legally fortified.
3. Implement a Robust Invoicing System
A good invoicing system isn’t just an administrative formality; it’s your first line of defense against bad debt. Make sure your invoicing system helps you keep track of what customers owe and sends reminders for unpaid or overdue invoices.
How Debtor Protect Helps: Debtor Protect’s Single Debtor Insurance focuses on your largest accounts, helping to mitigate risks related to significant unpaid invoices and improving cash flow.
4. Clearly Define Payment Terms and Policies
Setting up crystal-clear payment terms and policies is essential to ensure you are paid on time. Make it a practice to be upfront about your expectations and consequences of failing to pay within the set timeframe.
How Debtor Protect Helps: With specialized products for both SMEs and the construction industry, Debtor Protect provides industry-specific credit insurance solutions to protect against non-payment risks.
5. Know Your Legal Rights and Responsibilities
Understanding the legal landscape around debt collection and consumer protection can save you a lot of headaches down the line. If you’re uncertain, always seek legal advice to be in the know about debt recovery processes and consumer protection laws.
How Debtor Protect Helps: Debtor Protect offers tailored credit insurance solutions that are fully compliant with legal norms and ASIC guidelines, thus providing an additional layer of security against bad debt.
We Are Here For You
Failing to manage bad debt and outstanding payments can have serious repercussions for your business. Thankfully, Debtor Protect offers a suite of credit insurance solutions to help you mitigate these risks and maintain a healthy cash flow. Don’t leave your business exposed to the unpredictabilities of debt recovery and unpaid invoices.
Take the first step toward a more secure financial future. Contact us to learn how we can help you manage your risks effectively.
