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Payment Plans; Extended Payment Plans
If DSO is creeping up, it is time to look at ways to better manage delinquent accounts. One way to do so is to actively discourage extended payment plans. If a payment proposal is under discussion, final authority to accept or reject it should be made only by a senior member of the credit department. Collectors should not have independent authority to either accept or propose extended payment plans. If you do accept an extended payment plan, make certain it is well documented. Ideally, this documentation will take the form of an interest bearing Promissory Note with a default acceleration clause, and accompanied by a personal guarantee.
© 2011. Michael C. Dennis. All Rights Reserved