Credit Policy for businesses and how to extend credit and manage credit risk

Believe it or not, Follow Up is your most important debt collection tool. If you don't follow up on any of your collection efforts, you have wasted your time.

It is up to you to be on top of payment promises, payment arrangements, past due balances, shortages on shipments, requests for paperwork or checks or anything to do with your customers.

If you don't follow up, you might as well not even try to collect. You might want to use a tickler file, either on your computer or on your desk.

When you make a collection call to a debtor and they say, "I will send $25 on Friday when I get paid." Great! Make sure you call them on Thursday to verify they are mailing that payment the next day. If you don't you will be calling them on Tuesday to ask where the payment is and they will tell you, "Oooops! I forgot to send that, I will do it this week." WRONG, this means you have let them be in control of how much money ou make. You need to stay in control of your cash flow.

A good example of how your follow up should work is:

1. Make a collection call and get a payment promise or schedule set up.
2. Send a confirmation letter with a payment envelope.
3. Call the day BEFORE the payment is to be mailed to verify it is going out.
4. Call the day AFTER to make sure the payment was sent, and  get a check #.
5. If you do not get the payment, call again and send another letter.

Make sure to document all your contacts with the customer or debtor.

If you do this once or twice with the same customer, they will get the idea and you won't have to do this in the future. You will save yourself time and money and get paid quicker by "training" your customers or debtors.