Collecting Your Past Due Accounts

Category:
Debt Collection
A problem that every business seems to have is customers who are slow to pay their bills, or customers who do not pay at all. This is even more of an issue when the economy takes a nose dive and money gets tight for everyone.

One answer to the problem is to have a clearly and plainly communicated payment policy at the outset with each new customer that comes on board. Of course, this is no substitute for integrity on the part of the customer, but it is just good business policy.

Have a process for sending invoices and send regular statements. You can also offer a substantial discount if customers pay early. This may make a difference with some of your late payers who pay late just because they think they can, even though they have to money to pay when they want.

Make it a point to contact overdue accounts more frequently, and perhaps that will stir some of the late payers, who may have had an incident or it just slipped their mind.

Use an ageing system that continually reminds you of who is late in meeting their obligations. Train your employees and staff to be polite, but firm in following up on late payers. Try to get a credit card over the phone, because promises to send a check rarely materialise.

Turn your bad debts over to a third party collection agency sooner, rather than later. Sometimes their calls can be more serious sounding and prompt action. The time for collection of an account over 60 days past due should definitely be referred to a collection agency.

Have an attorney send the debtor a letter demanding payment. Sometimes the attorney letter will let a customer know that your mean business, and that he has a legal obligation to pay you for your product or service. This may be a wake up call for the customer and cause him to work something out with you if he is short of funds.

Use “address service requested” when you send out invoices, printed just below the return address. the Post Office will locate any change of address for you if the party has moved, and the cost is a very small fee.

It makes it difficult for a business to have too many customers who are not meeting their obligations, as continued cash flow is the lifeblood of a business.

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