Credit and Collections Tools and Tips

Ideas for Accelerating Debt Collection

• If you do not have a lockbox system, consider getting one.
• If you have a lockbox system, track customers that are not using it.  Contact those customers and get their commitment to start sending payments to the correct remittance address.
• Make certain that there are no internal problems that result in delays in your invoices being mailed or transmitted to customers.
• Make certain that your order entry department carefully reviews purchase orders and to reject purchase orders with invalid prices, unacceptable payment terms or other incorrect terms and conditions.
• Enforce your early payment discount policy by charging back unearned cash discounts and insisting that customers repay them… or at least agree to stop taking them.
• If customers are not taking early payment cash discounts, contact their Controller [or equivalent] to ask them to do so.
• Shorten any grace period that exists before calling customers to inquire about the status of past due balances.
• Create a schedule indicating how frequently past due customers should be called for collectors.
• State in writing the maximum amount of time the collector has to make first contact to a customer with a past due balance.
• Be sure that your collectors are prioritizing collection calls.  The low tech solution to this is to provide collectors with a list of customers showing descending dollars delinquent.

© 2011.  Michael C. Dennis.  All Rights Reserved.  Please visit his website at www.coveringcredit.com