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Identify a credit collection policy
One of the main reasons for delinquent accounts receivable is that the organization has not described to its business customers when and how balances should be paid. If business customers are not well informed that accounts really need to be paid on time, then they are likely to pay later or even not pay at all. Make sure your corporation’s payment terms are clearly stated on paper for each business customer.
Bill quickly and send regular statements
If you don’t have an ongoing billing and billing process, get one. In many cases, the company has not paid because they have never been recently charged and were not instructed to pay on time. This particular circumstance tends to occur in small or newer organizations since they are often short of staff and capital.
Use “Address Service Requested”
Without a doubt, one of the most difficult recovery problems is tracking down a business customer who has “missed”. Almost every organization needs to be informed about this particular service provided by the Post Office. Any type of statement or message sent from a business or professional office must have the words “Address Service Requested” printed or stamped on the envelope, just below your return address in the upper left corner. If a statement or invoice is mailed to a customer who has moved without informing them of the new address, and the terms “Address Service Requested” appear on the front cover, the post office will investigate these details and return the envelope with a yellow label providing the new location or additional updated information. If the customer has placed a “forwarding request” through the post office, the post office will forward the envelope to the customer and provide a form #3547 with the updated address and ask for approx. 50 cents. This will keep your address files up to date.
Contact delinquent debts more regularly
No law says you can communicate with a business customer only on a month-to-month basis. It is a good idea to call debtors every 5-10 days. Doing so will allow you to kindly remind the business customer of the payment terms.
Use your own aging sheet, not your feelings
Many companies (or well-meaning staff) have let an account age without thinking of receiving it, mainly because they thought the customer would probably make the payment sooner or later. While there are numerous cases of abnormal circumstances, the truth is that if you are not being paid, someone, usually the one who was in contact with the debtor before, is receiving the payment. So stick to your system and follow up. You will soon learn who intends to pay and who does not. After that, you can consider the appropriate action once you know the status.
Properly educated staff
Even knowledgeable workers can often become complacent when it comes to late-arriving business customers. This commonly occurs once they have made and broken promises to pay. Make sure the staff is firm, but courteous when dealing with them. Your debt recovery staff might benefit from customer service training because they basically have to “sell” your business customers that you expect to get paid. Make sure your debt recovery workforce is trained to not only keep the account out of delinquency, but also to continue to maintain an upbeat disposition with the client.
Keep accurate records
As soon as a new customer is approved for credit, it is extremely important to maintain complete and timely data in the payment history. If you notice any changes from previous payment behavior, and particularly if installments become unusually slow, a quick follow-up is indeed warranted. This not only gives you early warning of upcoming payment problems, but also gives you the opportunity for early intervention when there is an external influence.
Follow Applicable Collection Laws
In many states, organizations are influenced by the same collection laws as debt collectors, such as calling customers at odd hours or disclosing to a third party that they owe you money are just a few of the many collection strategies that can have significant repercussions. If you’re not sure, call your state’s department of finance, which governs and oversees debt collectors.
Use a third party sooner
In the event that you have methodically searched for your past due business accounts up to around 60 to 90 days from the due date and they still haven’t paid, it may be wise to turn it over to a commercial collection agency. Statistics show that after 3 months, the result of internal recovery initiatives disappears by 80%. That suggests that budgeted time and savings for commercial collection attempts should be concentrated within the first 90 days, where the bulk of your commercial accounts can and actually should be collected. Thereafter, a third party can motivate a business customer to pay in ways that you cannot, due to the fact that the demand for payment originates from someone other than you. Before you have to pay a portion to a commercial collection company, or use small claims court or an attorney. Contingency fee services are a good solution to your collection needs.
Fix previous bugs
Sometimes your business customers don’t pay because they feel you made a mistake. Unfortunately, many business customers believe that “the owner/president doesn’t need the real money.” Denying an apparent oversight simply stokes the fire associated with resentment your client may currently feel. If the reason for the actual non-payment is a dispute about the quality of your product or service, a mutually acceptable agreement involving both you and the customer must be reached as soon as possible. The business customer could use a minor dispute to keep significant payments. Insist that the undisputed portion be made up immediately, which implies that the balance will be disputed. This will not only help you get paid, it shows the business customer that you are listening to their problems.
not everything is salvageable
Even when developing and maintaining a specific merchant billing method, there are some merchant accounts that will never be billed. By distinguishing these forms of accounts from the start, you and your corporation will save a lot of time and money. Although many may get ahead, you will find that, overall, the number of late paying and non-paying organization accounts will drop dramatically.