Moon Twp, PA (PressExposure) July 07, 2009 -- Recovering bad debts can be an arduous task, particularly in days of economic downturn and recession when the frequency of bad debts rise. But before a bad debt can be reclaimed, it has to be identified in time before things become worse. This is the first step in salvaging a bad debt. The next step is to collect the debt. We discuss these two steps in this article in more detail.
Identifying a bad debt early improves the chances of reclaiming it. The creditor has to look for indications in customer's conduct that point to impending default. The following are some of those indicators.
â¢ The customer frequently breaks the terms of repayment like late payment, postponement, etc. offering frivolous excuses â¢ The contact person is unavailable whenever a call is made for debt collection â¢ Unrealistic complaints are made by the customer with regularity regarding the quality of product or service or both whenever asked for payment â¢ The debtor fails to answer reminders through phone calls and / or in writing. Also the debtor changes the contact telephone no. and / or address without leaving forwarding information
Gathering information about the customers through sources like suppliers, other customers, financial papers etc. would help in identifying customers who are not financially sound and early recovery of debts. Bad debts can be minimized by regular exchange of customer information between sales and finance departments.