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Customer Files
Can Ease Negotiations |
Regardless of the economy, there will always be customers who don't pay their bills on time. Your efforts are complicated by your unique relationships with customers and the responses they have to different collection strategies. To improve the results of collection efforts, you need to customize guidelines for each account. These guidelines help your billing department balance its collection efforts with your company's relationship with the customer.
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Collection Mistakes to Avoid
Not having a standard policy. Whether or not you customize your efforts for each account, your credit policy should be standard and written. It should include the payment due date and the steps that will be taken when payment is not made. Also make sure customers know there is a fee for late payments.
Failing to act early. As soon as you sense that payment is not forthcoming, make the call or send the letter.It could be that the payment schedule is the problem, and a minor revision is all it will take to get the checks flowing.
Not following up on your previous efforts. Collections are not fun and it may be tempting after you make such a call to set it aside for awhile. But that gives the customer the impression that the heat for the time being. Instead keep the contact information handy and if payment isn't made when promised, call again.
Being too soft. With today's technology, it's easier than ever for customers to avoid your calls. Be persistent till you make contact. And when you do talk to them, set a firm date for payment. Otherwise you could spend days wondering if the check is in the mail.
Step it up. If payment is still not forthcoming, don't just keep doing the same things to collect. Increase your efforts to let the customer know you mean business. Just be sure you are in compliance with laws applicable to collection in your area. |
Make sure that each customer file contains the following:
Your relationship with the customer, its importance and its history.
Customer contacts, including all the names, addresses, e-mails and telephone numbers. One major reason why bills go unpaid is because they are sent to the wrong address. Update your database of contact information regularly.
A complete history of sales to the customer.
A history of payments, both on time and late. Notes about previous collection efforts - what succeeded and what failed. Also include a list of the discounts the customer has received.
Projected sales and collection cycles for the customer's business, as well as any data and forecasts for the their industry. Include information about their accounts payable contacts and process.
A risk or relationship rating assigned by your company.
The more documentation your accounts receivable managers have, the better they can adapt their tactics to individual customers. And that produces a higher rate of success.
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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