• Due to increasing competition and demand for clients most businesses are forced to sell on credit.
  • The ineffective handling of credit policies or procedures causes delinquency.
  • There is increased abuse of the credit grace period leading to slow or poor remittances.
  • The sales department sets high targets for marketers who strive to sell in order to achieve sales targets.
  • Multiple borrowers and potential defaulters accessing credit to services or products without tangible repayment plans.
  • Lack of trained collectors to demonstrate professionalism within the credit, revenue and debt industry hence recovery is mostly done by the court bailiffs or auctioneers.
  • Every business competes for cash which is limited and scarce hence increasing debt portfolios.
  • Increased dishonesty and bribery as some collectors connive with debtors.
  • There is inadequate follow up especially on old accounts as staff concentrate on easy to collect or new accounts.
  • Most debtors prefer instalment payment hence leaving huge balances aging on account and later accumulate arrears.
  • Lack of governing authority to oversee credit and debt creates laxity and brutality.
  • Inconsistency and irregular paying habit in some industries.
  • Busy schedule of management hence unable to monitor effectively

Late or non-payment of debts can cause serious cash-flow problems, resulting in your business facing many problems of it’s own- from unhappy staff to not being able to maintain supply-and-demand for other customers you may have.

Historically, businesses have always faced problems with customers who are unwilling to pay and during financial difficulties, such as the current recession, making sure your customers pay their bills on time can be very difficult. As the credit crunch takes hold recovering outstanding debts poses a huge problem in such circumstances. Business who are owed money watch as their customers ignore calls, letter and emails and virtually disappear into thin air no matter how many times you try to contact them.

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