Some businesses have slow-paying customers or past due balances because they didn’t “train” their customers in the beginning. It is important that your customers know your credit policy and/or 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 justly 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.
Adhere to your collection policies no matter what. You cannot see the future or changing market conditions. Try to keep current with trade reports pertaining to specific companies and industries.
Change your collection letters frequently— you can make them stronger and more action-oriented.
Discourage payments on account or changes in payment terms. Too many payment plans or changed payment terms can impair your cash flow.
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.
On large accounts, call or send a reminder just a few days after terms if they become delinquent.
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.
If a customer disputes the quality of merchandise or service, price or delivery, you should attempt to resolve this right away. Insist they pay the portion of the bill that they are not disputing while you work out the disputed problem.
If all else has failed, you may want to refer the account to an outside collection agency.
Update your records often, making sure the telephone numbers and addresses you have for your customers are current and up-to-date.
By: Michelle Dunn
Published: June 29, 2007