Ten Truths about Business Collections

There are many myths and misconceptions about debt collection and there are a number of universal truths about this process, including the ten listed below.  Some readers may consider these ideas to be little more than common sense.  It is important to remember that what is obvious to some people may not be to others.  A lot depends on the type of training the reader received in business to business debt collection best practices:

1. The longer an account is past due, the harder the balance is to collect,
2. The telephone is the most effective debt collection tool/technique, 
3. The longer you wait before making that first collection call, the more likely your customer is to think you are complacent about collections, 
4. Slow payments hurt both the buyer and the seller. The seller's cash flow is damaged, and the buyer's reputation and ability to purchase more on open account terms is damaged, 
5. A courteous, firm and professional collection process is something that most customers will respect - and it will be a deterrent to delinquent payments, 
6. Always avoid using form letters. Personalize dunning notices by merging your mailing list with your account contact name field so your letter is sent to a specific person, 
7. Debt collectors usually hold onto problem accounts for too long before referring them to their managers. This mistake should be corrected, 
8. The overwhelming majority of deductions are the result of errors made by the seller... so finding and correcting these internal problems should be one of the credit department's top priorities, 
9. Always ask for and expect a commitment for payment of the entire past due balance, 
10. Recognize that any call that does not result in a payment commitment [including collection calls in which you have to leave a voice mail message for accounts payable] must be considered as at best under-productive and at worst unproductive. Always try to speak to someone who can make and keep a payment commitment.

© 2010.  Michael C. Dennis.  All Rights Reserved