Top 7 methods for improving collection procedures
Some businesses have slow paying customers or past due balances because they didn’t “train” their customer in the beginning. It is important that your customers know your credit policy and/or your terms of payment before they become customers. Reiteration of your credit policy, when payment is overdue, is a good step to take in trying to obtain payment. Always ask for payment when it is due.
You should never extend credit to a new customer without having them complete a credit application and go through the credit approval policy. Once you extend credit, it is important to maintain accurate records on an account payment history.
1. Follow your collection policies no matter what.
2. Change your collection letters frequently, you can make them stronger and more action oriented.
3. Discourage payments on account or changes in payment terms. Too many payment plans or changed payments terms can impair your cash flow.
4. When you receive payments “on account” be sure to follow up right away with a letter or phone call thanking them for their payment and telling them what their new balance is and when to send the next payment. Don’t ask them when they will send the payment; tell them when to send it.
5. On large accounts, call or send a reminder just a few days after terms if they become past due.
6. Ask to speak to a manager or owner when making collection calls rather than speaking to a secretary or receptionist. Go right for the decision maker.
7. Update your records often, making sure the telephone numbers you have and addresses for your customers are current and up to date.
This is an excerpt from my new e-book Effective Collections, a proactive approach to credit management.
You should never extend credit to a new customer without having them complete a credit application and go through the credit approval policy. Once you extend credit, it is important to maintain accurate records on an account payment history.
1. Follow your collection policies no matter what.
2. Change your collection letters frequently, you can make them stronger and more action oriented.
3. Discourage payments on account or changes in payment terms. Too many payment plans or changed payments terms can impair your cash flow.
4. When you receive payments “on account” be sure to follow up right away with a letter or phone call thanking them for their payment and telling them what their new balance is and when to send the next payment. Don’t ask them when they will send the payment; tell them when to send it.
5. On large accounts, call or send a reminder just a few days after terms if they become past due.
6. Ask to speak to a manager or owner when making collection calls rather than speaking to a secretary or receptionist. Go right for the decision maker.
7. Update your records often, making sure the telephone numbers you have and addresses for your customers are current and up to date.
This is an excerpt from my new e-book Effective Collections, a proactive approach to credit management.
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