Corporate debt is one of the many factors that cause bankruptcy in many businesses. It affects both small companies and large corporations and often, a professional help is required (like the London insolvency practitioners firm Hudson Weir). Since the 2009 recessions, global corporate debt has been on the rise. According to data from Statista, the global corporate debt stood at $72 trillion in Q1 2019. By the end of 2019, it had risen to $74 trillion. Every business needs a debt recovery strategy.
What is Debt Recovery?
Debt recovery is a process by which an unpaid loan is retrieved. Typically, creditors outsource the recovery to third-party collection services. Defaulting in loan payment can harm your credit score and company reputation. Debt is not always a bad thing. Good debt is one used in growing a business. Countries borrow money to help grow their economies. For example, Australia’s national debt in 2018 was about $532 billion, most of which were used for infrastructure development.
Strategies for Debt Recovery
If your business gives out loans or your clients default on their payments for services rendered, here are some strategies for efficiently recovering the funds.
- Get a Legal Team
Debt recovery can be time-consuming and frustrating, especially if the debtor is uncooperative. The best and most reliable strategy in debt recovery is to consult with lawyers, particularly those who specialize in debt recovery and litigation. Prime Lawyers has the best debt recovery professionals in Australia. Not only will lawyers save you the hassle of chasing your money around, but they will also prevent potential lawsuits that could arise in the process. Debt recovery lawyers work directly with debt recovery agencies and mercantile firms. Some debts need to be recovered by going through the courts, which is a specialty of lawyers. Lawyers also cover a wide range of related services including bankruptcy, corporate insolvency, small claims debt recovery, and commercial disputes. You can consult with Prime Lawyers Sydney has to offer for efficient and cost-effective debt recovery.
- Review Credit History and Locate Hard-to-Find- Debtors
Before giving out a loan or rendering a service, review the client’s reputation and credit history. Local banks and credit companies have a credit history of individuals and businesses. In most cases, you can simply ask the client to provide the information. A client with a low credit score has a reputation of defaulting on loans. For those who are evasive, hire a debt collection agency to help you locate hard-to-find debtors.
- Use a Central Collection Management System
Monitor unpaid debts by using a central collection management system. A management system allows you to track unpaid debts and see its impact on your company finances. Some systems connect with debtors’ accounts – within legal bounds – informing you when their ability to pay has improved. By so doing, you can recover all your debts while giving your client good customer experience (not all those who default have ill intentions). Using technology also reduces the cost of recovering debts significantly while maximizing profit.
You should not have to worry about debt recovery. Get the best lawyers and technology on your side to help so you can focus on other aspects of growing your business.