flexible debt collection procedures

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flexible debt collection procedures

flexible debt collection proceduresIt’s important that clients know what a company’s credit policy is but NOT what the debt collection procedures are that are used to to implement that policy.  The Credit Policy should be highly visible to customers. On all relevant documentation … engagement letters, terms of trade, quotations, contracts, invoice copies …

Debt Collection Procedures on the other hand should be clearly documented, circulated to all staff, confidential, yet flexible.  A “different” approach is required for those customers who persistently pay late.  Some customers, once they get used to your ‘routine’ (know what your debt collection procedures are) will abuse it.

… to explain
The only people that know how a business really operates are those within it. Same thing with debt collection procedures. The business knows how far they will go to collect payment, but the debtor does not. see Fear Of The Unknown.

But, if debtors know what a business’s debt collection procedures are, and if those procedures are not flexible then some of them will delay payment next time. Why?  Because they know that they can “get away” without paying for a little longer.

So, after the credit policy has been decided,

  • 1  Create a step-by-step debt collection procedure.
  • 2  Document it.
  • 3  Circulate it to all internal staff.
  • 4  Do NOT tell customers.
  • 5  Review it – at least quarterly.
  • 6  Be prepared to vary it as situations demand.

 

After all, once you know how something’s done or what to expect, it’s not so effective the next time. Don’t you agree?

By | 2020-02-24T05:37:00+00:00 September 5th, 2011|miscellaneous|6 Comments

About the Author:

Have you ever wondered why a client does business with you and then ignores your invoice like they had no intention of paying it in the first place or they treat you like their own personal line of credit, leaving YOU dangling, waiting months for their payment? Unfortunately this situation is all too common and can even be puzzling for the most experienced business owner. If you’ve ever had to handle outstanding accounts or you are just so over non-payers, then we can help. Real-world skills, solutions, tips & strategies to get more accounts paid on time, and, most importantly, how to maintain customer goodwill while keeping YOUR cash flow in the positive. You will find the blog posts helpful but to get real results, contact us by using any of the forms on this site, by email or by phone. I’ve been involved in the management of accounts for over 30 years, heard every excuse in the book, can spot a non-payer at 20 paces. Finance Companies in the 70s (systematic, tough), professional firms in the 80s (no systems, too gentle) and, since then, just about every other sort of business you can think of. I’ve written books on the topic, spoken all over the place about it and the blog in this website is my way of “giving back”. I hope you find it helpful.

6 Comments

  1. Williams jack April 2, 2014 at 7:13 pm - Reply

    You describe the precious information about the Debt and its uses. Thank you so much for sharing this one.
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  2. Dexter jazz April 11, 2014 at 11:07 am - Reply

    This is one of the amazing article about Debt that you have shared in this post. I would like to read some of the marvelous information.
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  3. Debtor Finance February 26, 2020 at 12:45 am - Reply

    Yes,I totally agree with what you said. I think that it’s important that clients know what a company’s credit policy is but NOT what the debt collection procedures are that are used to to implement that policy. This article is very informative and helpful. I’ll definitely return to this very helpful site.

  4. FactorLoads March 11, 2020 at 4:42 am - Reply

    Yes,I totally agree with what you said. I also think that it’s important that clients know what a company’s credit policy. This article is very informative and helpful. I’ll definitely return to this site.

  5. Lauren May 27, 2020 at 10:35 pm - Reply

    Yes, I agree with what you said. I also think that Debt Collection Procedures should be clearly documented, circulated to all staff, confidential, yet flexible. I think that the stuff should know it better in order for everything to process well and avoid issues in business or finances.

  6. Philip June 4, 2020 at 2:44 am - Reply

    Yes, I think that documentation is very important. It can serve as a good reference or proof. Thanks for sharing this. I’ll definitely consider what you said here.

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