How can bad debt be controlled effectively?

Collecting payment at the time of closure is a highly effective strategy for controlling bad debt. This approach ensures that the rental charges are settled before the customer departs, significantly reducing the risk of non-payment. When payments are collected upfront or at the moment the service is rendered, businesses minimize the chance of incurring bad debts since there is no outstanding balance once the rental has concluded.

This method not only enhances cash flow but also streamlines accounting processes, as all transactions are finalized before the vehicle leaves the lot. Consequently, it helps in maintaining a healthier financial position and lowers the administrative burden associated with chasing outstanding payments later.

In contrast, increasing rental prices could deter customers and potentially reduce overall sales, while offering discounts for early payments may not be feasible for all clients and could reduce potential revenue. Expanding the customer base does not directly address the issue of bad debt and could lead to more risk if new customers are not assessed properly for creditworthiness.