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

• Enforce your credit policy.
• Make sure your debtor is “worth” something before suing them—if they don’t have any assets there is nothing to attach or garnish if they do not pay.
• Ask for payment when payment is due.
• Research and sign up with a collection agency even before you need one, and then place accounts before they are too old.

Always check credit references. If something doesn’t seem right, it’s probably not. If you are not happy with the references provided to you, ask for additional references. This customer wants credit from you, so you call the shots. If you give them credit without checking them out, they call the shots. The only way to keep control of your money is to have a credit policy in place. Why would you let anyone else control your cash flow?

Silence Is Golden
My favorite tool when making collection calls is silence. I had read about this in books and other collectors tell me about it, and it is really hard to do. Once you do it and get good at it, you will always do it. It works great. Just call your debtor and explain why you are calling as I have mentioned earlier and then just wait for a response. I have had debtors just sit and watch TV; I can hear the TV in the background and they just don’t say anything because they really don’t know what to say. I have had to say, “Hello? Are you there?” They reply, “Yes.” I repeat who I am and why I am calling, and ask the question again. I have had debtors hang up on me, or just swear at me. I have had some tell me their life story of why they can’t pay, and others go on and on but make the payment or a payment arrangement.

When you make collection calls and deal with debtors, you might need to brush up on some people skills. I have attended seminars on telephone collections and read books about them as well as books about dealing with difficult people, anger management, psychology, and mediation skills. These are all tools you will need when dealing with a client or customer who has become past due and is unable or unwilling to pay.

I find these tools helpful when performing customer service and networking as well. The more you know about your potential customers and how to handle what their needs are, the more success you will have.