1] Have a Defined Credit Collection PolicyOne of
major causes of overdue receivables is that business has not defined to its consumer customers and staff when accounts are to be paid. If consumer customers are not educated that accounts are to be paid on time, then chances are they'll pay late or sometimes not at all. Make sure that your company's terms of payment are clearly stated in writing to each consumer customer.
2] Invoice Promptly and Send Statements Regularly
If you don't have a systematic invoicing and billing system, get one. Many times consumer hasn't paid simply because they haven't been billed or reminded to pay in a timely manner. This situation usually occurs in smaller or newer businesses where they're short on staff to invoice and bill.
3] Use "Address Service Requested"
One of most difficult collection problems is tracking down a consumer customer who has "skipped". All businesses should be aware of a special service offered by Post Office. Any statement or correspondence sent out from a business or professional office should have words "Address Service Requested" printed or stamped on envelope, just below your return address in top left corner. If a statement or invoice is sent to a customer who has moved without informing you of their new address, and words "Address Service Requested" appear on envelope, Post Office will research this information and return envelope to you on a yellow sticker that gives new address or other updated information. If customer has placed a "forwarding order" with Post Office, Post Office is required to forward envelope to customer and give you a form #3547 with new address and charge you approx. 50 cents. This will keep your address files up to date.
4] Contact Overdue Accounts More Frequently
No law says you can contact a consumer customer only once a month. The old adage "The squeaky wheel gets grease" has a great deal of merit when it comes to collecting delinquent accounts. It's an excellent idea to contact late payers every 10-14 days. Doing so will enable you to diplomatically remind consumer customer of your terms of payment.
5] Use Your Aging Sheet, Not Your Feelings
Many businesses (or well-meaning people on their staff) have let an account age beyond point of ever being collected because he or she "felt" customer would pay eventually. While there are a few isolated cases of unusual situations, truth is that if you aren't being paid, someone else is. So stick to your systematic plan of follow up. You'll soon know who intends to really pay and who doesn't. You can then take appropriate action once you know where you stand.
6] Make Sure Your Staff is Properly Trained
Even "experienced" staff members can sometimes become jaded when dealing with delinquent consumer customers. This usually occurs when they have made and broken promises for payment. Make sure staff is firm, yet courteous when dealing with them. Your collection staff could benefit from customer service training because, in effect, they must "sell" your consumer customers on idea that you expect to be paid. Make sure that your collection staff is trained to not only bring account current, but to also maintain good will with them.
