Faster Collections as easy as A.B.C.
The title is an exaggeration...debt collection is never easy, but the following techniques can help accelerate payment from delinquent customers:
Abandon grace periods in favor of calling customers as soon as possible once the account becomes past due.
Always enforce your cash discount policy strenuously. If you do not, you will almost certainly see an increase in the number of customers paying late and taking the unearned discount anyway.
Ask applicants to sign a Credit Application and Agreement that, among other things, states that the applicant acknowledges your terms of sale, your discount policy, your RMA policy, and the FOB point among other important items. Having a signed agreement such as this will make it easier to resolve problems that may arise during the course of your business relationship.
Become active in one or more industry credit groups in order to gather information and insights about customers and potential customers from your peers and your competitors.
Bear in mind that the best way to control delinquencies is to carefully control the new account review and approval process...and recognize also that active accounts need to be updated and reviewed periodically as a kind of preventative maintenance.
Contact customers by telephone rather than relying on dunning notices or collection letters. Written correspondence is easy to ignore, but a persistent collector calling for information about a past due balance is harder to ignore.
Confirm commitments for payment for large past due balances and for accounts that are seriously past due in writing or better yet ask the customer to confirm their payment commitment to you in writing, even if it is only an e-mail message.
Competitive pressures usually necessitate selling to customers identified as marginal accounts. These accounts should be flagged as marginal, and collectors should be alerted to contact them quickly and follow up more diligently on any payment commitment they receive.
Contributed by Gladtrust Management Co., Ltd China : www.gladtrust.com