In the fast-paced world of construction, chasing down overdue invoices can feel like an unwelcome distraction. But when aged debtors linger, they can wreak havoc on your cash flow, hindering growth and even threatening your business's stability.
Here, with years of experience under our belts, we at Glenwood want to share the 5 crucial mistakes we've seen construction companies make when dealing with aged debtors, along with actionable advice to steer clear:
Mistake #1: Waiting Until Liquidation
It's tempting to think a debtor "will come around eventually," but waiting until they're on the brink of closure rarely yields results. Early intervention is key. Proactive steps taken within 30-60 days significantly increase your chances of recovery.
Mistake #2: Scattergun Approach
Bombarding debtors with inconsistent and poorly timed communications weakens your position. Develop a structured escalation process, starting with polite reminders and progressing to firmer actions like debt recovery agencies and legal involvement.
Mistake #3: Neglecting Internal Credit Control
Watertight credit control policies and procedures are your first line of defence. Ensure clear terms, conduct thorough credit checks, and enforce late payment penalties. Remember, prevention is always cheaper than cure.
Mistake #4: Lack of Defined Process
Without a defined recovery process, valuable time and resources are wasted. Implement a systematic approach that outlines roles, responsibilities, timelines, and communication protocols. Consistency is crucial.
Mistake #5: Not Knowing When to Ask for Help
Debt recovery is a specialised field. Recognising when in-house efforts are insufficient is key. Seeking expert assistance from experienced professionals can significantly improve recovery rates and save you time, money, and stress.
Remember: Aged debtors don't have to be a burden. By addressing these mistakes and implementing clear strategies, you can protect your cash flow and ensure your construction business thrives.
For a free consultation on how to optimise your debt recovery strategy, contact us today.
Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. Please consult with a qualified legal professional for guidance on your specific situation.