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. 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?
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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.
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.
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.
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.