Among the major causes of overdue receivables is how the business has not defined to its commercial customers when and how accounts should be paid. If commercial customers are not educated that accounts should be paid on time, then chances are they'll pay late or even fail to pay all together. Make sure that your corporation's terms of payment are clearly stated on paper to each commercial customer.
Bill Promptly and Send Statements Frequently
If you don't have the consistent invoicing and billing program, get one. Many times the company hasn't paid since they haven't been billed or reminded to pay on time. This situation usually occurs within smaller or newer businesses since they're usually short on staff and funds.
Use "Address Service Requested"
One of the hardest collection problems is tracking down a commercial customer that has "skipped". All businesses should be familiar with this special service offered through the Post Office. Any statement or correspondence sent from a business or professional office must have the words "Address Service Requested" printed or stamped about the envelope, just below your return address within the top left corner. If a statement or invoice is delivered to a customer who has moved without informing you of the new address, and the words "Address Service Requested" appear about the envelope, the Post Office will research these details and return the envelope for you with a yellow sticker that provides the new address or additional updated information. If the customer has placed a "forwarding order" using the Post Office, the Post Office will forward the envelope to the customer and provide you with a form #3547 with the new address and ask you for approx. 50 cents. This will keep your address files current.
Contact Overdue Accounts More Often
No law says you may contact a commercial customer only monthly. It's a great idea to contact late payers each and every 5-10 days. Doing so will allow you to kindly remind the commercial customer of the terms of payment.
Use Your own Aging Sheet, Not Your Emotions
Many businesses (or well-meaning people on the staff) have let an account age beyond the idea of ever being collected because she or he "felt" the customer would remit eventually. While there are several isolated cases of unusual circumstances, the truth is that if you aren't being paid, someone otherwise is. So stick to your system and follow-up. You'll soon know who intends to actually pay and who doesn't. After that you can take appropriate action once you know status.
Properly Trained Staff
Even "experienced" personnel can sometimes become jaded when coping with delinquent commercial customers. This usually occurs once they have made and broken guarantees for payment. Make sure the actual staff is firm, yet courteous when coping with them. Your collection staff could take advantage of customer service training because, essentially, they must "sell" your commercial customers about the idea that you expect to become paid. Make sure that your collection staff is trained not to only bring the account non-delinquent, but to also maintain a positive disposition with the customer.
Keep Accurate Records
Once a new customer is accepted on credit, it is vitally important to keep accurate and timely records on the payment history. If you observe any deviation from past repayment patterns, and especially if obligations become unusually slow, immediate follow-up is actually warranted. This not only provides you with an early alert to upcoming payment problems, it also gives you the opportunity for early intervention when there is an outside influence.
Follow Pertinent Collections Laws
In many states, companies are governed by the same collection laws as are debt collectors. For example, calling customers at an unusual hour or disclosing to a 3rd party that they owe you money are just a few the numerous collection practices that may cause serious repercussions. If you aren't sure, call your state's department associated with finance which governs and monitors debt collectors.
Use a Third Party More Quickly
If you've systematically pursued your delinquent commercial account up about 60 to 90 days from the due date and they still haven't paid, it might be wise to hand it over to a commercial collection agency. . Statistics show that after 3 months, the effect of in-house recovery efforts wears off 80%". That means that the time and savings budgeted for commercial collection efforts ought to be focused within the first 90 days where the majority of your commercial accounts can and really should be collected. From that stage on, a third party can motivate a commercial customer to pay for in ways you cannot, due to the fact the demand for payment is originating from someone other than you. Before paying a portion to a commercial collection company, or using small claims court or a lawyer. Contingency rate services are a good solution to your collection needs.
Correct Past Mistakes
Sometimes your commercial customers don't pay because they feel you made a mistake. Unfortunately, many commercial customers think that "the owner/president doesn't need the actual money". Denying an obvious mistake only fans the fire associated with resentment your customer may currently feel. If the basis of the actual non-payment is a dispute over the caliber of your product or service, a mutually agreeable settlement between you and also the customer should be arrived on as soon as possible. The commercial customer could use a minor dispute to keep substantial payment. Insist that the undisputed portion be paid immediately, indicating the balance is going to be negotiated. This will not only assistance to collect payment, it shows the commercial customer that you're listening to his or her concerns.
Not Everything is Collectible
Even by establishing and adhering to a particular commercial collection plan, there are a few commercial accounts that won't ever be collected. By identifying these types of accounts early, you will save yourself and your company a lot of time and money. Even though several may slip by, you'll find that overall the amount of slow pay and nonpaying business accounts will greatly diminish.