As a business owner, you are no doubt aware of the struggles that many companies and individuals are going through as a result of the recent pandemic. One term you might hear used more often lately is bad debt. Many companies aren’t aware of the advantages of working with a commercial collection agency, which you can learn more about by visiting www.directroute.co.uk/commercial-debt-collection-agency. Keep reading as we discover what bad debt is and how we can help you to collect funds you may be owed as a business.
What is a Bad Debt?
When we discuss bad debt recovery, we are referring to a payment that is received after it has been stated to be uncollectable. Bad debt will be recorded to say it’s a write-off for your business, but you need to ensure you account for this within your business. This usually occurs following some form of legal action or following a bankruptcy. Other times, invoices are written off quickly, and there may not have been enough time given to explore the options on offer for recovering the debt.
When working with bad debt, there are certain things you can do to protect yourself and deal with the accounting associated with bad debt recovery. Outstanding balances and loans which are no longer recoverable need to be written off by your business. Of course, this is one of the biggest risks of doing any type of business using credit, as there is naturally always some form of risk associated with this type of practice. To estimate bad debt, you can either use a percentage of sales or an accounts receivable ageing method. Both businesses and individuals need to account for these in order to ensure they are compliant when filing their tax returns. We’ll be here to support you with this task and answer any questions you have in regard to bad debt within your business.
Bad Debt Recovery
Our team knows that bad debt is a complex topic that many businesses still don’t fully know how to account for. If you are concerned about bad debt, there are many advantages to working with a commercial debt collection agency. Debt recovery during the pandemic has been incredibly tough on many businesses. However, we’ll be here to support you during this time and help you to get back on track. There are many benefits to working with our team, and you’ll find that it’s a cost-effective way to recover potentially lost costs for your business. We work with businesses across the UK and have a great record for results in debt recovery.
Financial Loss from Bad Debt
Bad debt provision can leave you in a tricky situation as a business owner, but we’ll be here to serve legal documents and help you to recover from the past two years. Your business needs to start keeping detailed records of any transactions you make so that you can build evidence of bad debt. Make sure you record all of your sales and invoices, which will make filing your tax return at the end of the year easier. No matter how big or small your business is currently, you need to work to ensure you overcome any issues with bad debt recovery by keeping track of all of your payments.
As a business owner, we recommend that you take steps in order to reduce the chance of bad debt in the first place. We recommend always checking your clients for their creditworthiness to begin with. When you take this step before working together, you’ll minimise the chance of having to endlessly chase them later on. Credit references can be incredibly helpful for companies working with new clients, as these will give you the information you need to create a secure partnership.
On top of that, you might want to look into using a personal guarantee from the business director. Bad debt recovery is far easier when you have these tools in place, and our debt recovery agency will find it easier to support you in the future. The more you can do to research the clients you are working with, the less likely you’ll find yourself dealing with bad debt.
Bad debt is something that more businesses than ever are dealing with in the UK. While things are starting to look up as we enter 2022, you aren’t alone if you are struggling with bad debt and endless issues with clients. For that reason, we recommend working with our team if you are dealing with bad debt this year. We’ll help you to avoid this in the first place and take steps to chase up payments in a timely and professional manner. Call us on 0330 229 1991 or email your enquiry to memberbenefits@directroute.co.uk today for more information about bad debt and how our team can help you to overcome this issue in the future.