Bill Collection

[cherry]

My friend actually shared with me how hard it is to collect payment from his customers without ruining the business relationship. I was actually trying to find solution to this but I guess all companies have this problem. I wanna know if there is an effective way to curb this.

[SunwayKid]

You can factored of the invoices to those banks / co that does factoring. This means you get your money at a discount and leave the collection to the co that you sold your debt to. The other way is to employ third party bill collector. :)

[totoro]

My friend actually shared with me how hard it is to collect payment from his customers without ruining the business relationship. I was actually trying to find solution to this but I guess all companies have this problem. I wanna know if there is an effective way to curb this.
good business relationships depend on mutual understanding about prompt payments. if one party is not paying promptly, he is not respecting the business relationship.

you can try telling them that you are also doing a business that needs steady cash flow, if you don't get payments, you can't do business as usual, and that hurts your business. if they don't empathize, then it's a bad relationship. hiring professional (not ah long type) payment collectors do help. sending reminders and calls every day help sometimes too.

there is a saying - "Live together like brothers and do business like strangers", or if you like - "Trust in God, but tie your camel." :)

[cherry]

hiring professional (not ah long type) payment collectors do help. sending reminders and calls every day help sometimes too.

Don't you think that this going to hurt the business reationship? I think my friend did a mistake by collecting the payment himself. Of course when these companies knows that they are dealing directly to the business owner they wold come up with excuses and ask for sympathy. I think he should ask his people to do it rather than himself or he can say that he's only an employee and doing his job... :D

[cherry]

there is a saying - "Live together like brothers and do business like strangers", or if you like - "Trust in God, but tie your camel." :)

That's a good one... To be safe I think the best way is to do business with total strangers because when friends and families involved it can be ugly :eek:

[CCY]

That's a good one... To be safe I think the best way is to do business with total strangers because when friends and families involved it can be ugly :eek:

Very true indeed.....Have been caught before in that sticky situation. Trust the customer a bit too much just because our sales head is like an abang adik with them. 3 new merc for 3 directors and a 20k rm Hi Fi installed in one of the car. Defaulted regular payments soon enough after the news spread among the suppliers about the firms liquidity . With that incident the company go under and we get caught with almost a 100k bad debt.
The trip point here is the spending on the vehicle that trigger the suppliers to demand payment . If no payment is made out or delayed, all started to demand cash for all their transaction.
Watch out , even if they are your best friend. They are the ones that can also hurt you the deepest in business.
For strangers , the transaction is normally COD now. Take it or leave it.

[bernardkok]

You can factored of the invoices to those banks / co that does factoring. This means you get your money at a discount and leave the collection to the co that you sold your debt to. The other way is to employ third party bill collector. :)


Dear SunwayKid, Can you explain more on factoring cause I face collection problems too.

[CCY]

Dear SunwayKid, Can you explain more on factoring cause I face collection problems too.

As far as I understand , the bank will only accept those invoices that they evaluated and that the debtors can afford to pay only .....:(

[SunwayKid]

Dear SunwayKid, Can you explain more on factoring cause I face collection problems too.

Factoring is a financial instrument where your company draw funds by liquidating your receivables.It gives you ready cash flow. Listed companies call it debt securitisation with ratings by RAM which determine the interest rate. The interest charged depends on how secure is the debt. You can checked out the website below on the list of companies offering the facility and their contact numbers.

http://home.eperolehan.com.my/en/about/features12.aspx

[birdy]

The best way is still don't simply give out credit. Get someone to evaluate the customer before extending credit to them. Don't go for those debt collector service as no matter how professional they are, they may be able to collect back the debts but at the expense of your company goodwill. Some of the service I know off, will send the debt collector to sit in your customer office the whole day and talk to other visitors about how bad pay master your customer can be....that will definitely 'force' your customer to pay up but I can say this will be the end of your business relationship or begin of another problem.

Try to negotiate with your customer for monthly instalment payments, instead of paying one whole lumpsum. If need arises, you may request lawyer to send demand letter (but suggest that to use it as last resort).