While the specific missions, goals, and objectives of businesses tend to vary, all for-profit enterprises have at least one thing in common: the desire to make sales. But drawing in clients is only part of the story; you also have to ensure that clients follow through with payments for the products and services you supply. Most customers are fairly responsible in this regard. However, in every industry there are always going to be those individuals who throw a wrench in the system, whether intentionally or because of some unfortunate and unexpected financial burden. In order for your business to get the compensation it deserves, you must have strong debt collections practices in place.
Improving Collections at Your Business
Choose customers wisely. This critical first step is often neglected by business owners. Selecting the right customers and clients means that you’ll likely devote less time and energy to debt collections. You should complete a comprehensive credit risk assessment before acquiring any new customer. If an individual or company has a poor credit record, it’s a red flag that you probably don’t want to do business with them, no matter how enticing new business may be.
Make a collections policy
It’s always good to have rock solid policy in place that employees and clients can refer to at any point. If you outline a very specific debt collections procedure, customers will know precisely what to expect and when. Ambiguity is not a businessman’s friend. Implement payment plans. Sometimes the client will actually be financially unable to make the full payment in a single installation. In those instances, you need to have some sort of payment plan option. Payment plans benefit both you and the client; it ensures you get compensated, and it lets clients know that you are willing to work with them on repayment.
Prepare ahead of time
You should have a database accessible to your collections employees that contain all of the relevant information about each customer, including the amount paid, amount owed, promises or agreements made as well as which of those promises were kept. That way your employees can easily reference that material during their collections transactions. As simple as a concept this may sound, such record keeping can be a huge burden on companies. See more below on how you can manage large amounts of client data.
Emails and letters sent through standard mail are far too easily ignored or tossed in the trash. Phone calls on the other hand give both a personal touch and a sense of urgency to the matter. Stay on top of things. If a customer sees that the 30 day allotted period has come and gone without any sort of noticeable response from your company they will probably remove the repayment of the debt from their personal priorities list. If you don’t seem to care, why should they? Always make contact as soon as a deadline has passed.
Debt collections aren’t one of those things you can deal with once and then let simmer for awhile. You have to constantly be engaged and proactive in the process which means consistently following up with each customer. Maintain professionalism. Yes, certain customers and clients will be aggravating to work with, but that doesn’t mean you should break from professionalism.
Why You Should Use Debt Collections Software
One of the simplest and most effective ways of strengthening your collections process is using credit collections software. This software is customizable to the unique demands of your business and can streamline the entire collections procedure considerably.
It allows you to evaluate a potential new client based on critical indicators like credit history, previous transactions, etc.It gives you the ability to organize credit reports so that the information is easily accessible and clear.It facilitates keeping contact information up-to-date so that you don’t waste time and money tracking debtors down.It helps you to track collection calls, emails, and standard mail notifications that have been sent out by your company as well as the relevant responses.
Using these tips in conjunction with credit collections software will put your company on the road to a quicker and more effective collections process.