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Preventing bad debts

Knowledge is key when it comes to preventing bad debt. It is important to do background checks on your customers, to ensure that they are a reliable and trusted source.

You should also check whether a company is in liquidation or deregistered on ASIC Registers.


Providing simple, easy and clear payment options is also important, as well as invoicing customers in a timely manner.


Additionally, creating sensible limits on the credit, will help to reduce the risk of bad debt.

How does a business recover debt?

When recovering a debt, it is important to take the necessary steps to ensure that the debt can be recovered.

This includes checking the terms of the contract, regularly monitoring when payments are due and received/not received, contacting the customer in writing to request payment, keeping records of all customer correspondence, sending regular payment reminders, and engaging a debt collector if the customer still won’t pay.

If the customer does not pay the debt after all the steps, it is necessary to take legal actions.

It is important to perform background checks on your customers before doing business with them. To prevent bad debts occurring and protect your business, you should: check whether a company is in liquidation or deregistered on ASIC Registers only send out goods or provide services after customers pay their bill provide simple, easy and clear payment options invoice customers quickly give discounts for paying on time or early create sensible limits on the credit that customers can take out with your business.
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