What Can I Do To Make My Collection Calls Easier?

Four Questions To Guide In Getting Delinquent Accounts Paid

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With the current state of the economy, many business owners are finding it difficult to manage their accounts payable.  One cause of this is the number of accounts receivable that are delinquent.  If you are not getting paid, it makes it very difficult to pay your creditors.  Following are some tips for getting the money you are owed so that you can efficiently manage your accounts payable.  

1. Are you sending an immediate reminder for missed payments?

One way to get your delinquent accounts paid is to send a reminder to the delinquent customer the day after the payment is missed.  Use friendly language, particularly if the customer does not have a habit of being late with payments.  If it is an oversight, you may be able to collect immediately.  If the customer is aware that they have not paid you, you will be catching the problem early before another payment is missed.

2. Are you sending email or postal mail reminders a week before due date?

If you have customers that are habitually late, send them a reminder through email or postal mail a week before the payment is due.  Some customers are late paying due to being unorganized rather than being short of funds.  A reminder before the payment is due may help you get paid on time.

3. Are you making follow up phone calls for late payments?

Follow up with a phone call if you don’t get a payment within a week of sending the reminder for late payment.  It is easy for customers to ignore a letter, but a phone call is more difficult to dodge.  The call may be ignored as well; however, if the customer answers, politely inquire as to when you can expect payment.  If there is a problem, many customers will be upfront in telling you that the payment will be delayed and when they will be able to pay.

4. Are you offering alternative payment options?

If you can be flexible by offering the option of paying the amount owed in installments, then do so.  A small portion every two weeks or monthly is better than a large debt going uncollected.  However, if it seems that the customer is unwilling to work out a plan for repayment, turn the account over to collections.  The longer you wait, the harder it is to recover payment. 

Solving the Collections Problem

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The very concept of extending credit to another is fraught with a number of problems. At a very basic level, every single time you extend credit to an individual or an organization you are taking a significant gamble. As much as credit card companies issuing plastic, banks giving our mortgages and suppliers taking net-90 terms may like to think they’ve figured out how to tell a potential problem client from a “sure thing,” it’s ultimately impossible to know who will make their monthly payments and who won’t. Even seemingly high quality, highly reliable clients will miss a payment here or there, and even the most affluent of clients can allow their loans to drop into delinquency.

Instead of obsessing over developing formulas that will help you find a truly “risk-free” client, it’s wiser to simply factor risk into you projections. Instead of attempting to only work with clients who you believe will never default on a loan, it’s better to create systems for collecting debts once they’ve fallen into delinquency.

The majority of companies would rather not collect their own delinquent debts. Not only is debt collection still considered a somewhat distasteful act, fixation on debt collection forces an organization to divert attention and resources away from what should be their primary focus; the day-to-day running of their business. Most companies will benefit from working with a qualified and experienced debt collection agency, especially if the debt they are looking to collect is business debt. Doing so will allow that organization to focus on what matters most, and to benefit from the expertise of a professional collection organization.