What strategies can be implemented to reduce bad debts?

Question

Accepted Answer

Implementing effective strategies can significantly reduce bad debts and improve cash flow management.

Conduct thorough credit checks before extending credit to customers. For example, use credit scoring systems to evaluate potential clients.
Establish clear credit policies and terms. For instance, define payment terms and conditions upfront to avoid misunderstandings.
Monitor accounts receivable regularly to identify overdue accounts early. Implement a system for tracking payment dates and follow-ups.
Offer discounts for early payments to incentivize timely payments. For example, a 2% discount for payments made within 10 days.
Implement a robust collections process, including reminders and follow-ups. For instance, send automated reminders as payment due dates approach.

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