You should have a standard, in-house written policy on handling accounts. The policy should include when to call new customers, when to call established customers and when to send letters. If you don't you need to start a credit policy today! It is one of the most important things you can do for your business.
Assuming that there is regular account billing, you will find that most credit users will pay as agreed. Some will pay after a mild reminder. Some will encounter a change in economic situation that makes it difficult to pay, such as illness or loss of job. After a regular follow-up with these consumers, they will usually give insight into their financial situation, their reason for nonpayment, a promise to pay and eventually they will fulfill this promise. A small number of consumers, rarely over 5%, will require more attention, but will eventually pay.
These consumers are not our main concern. They are mentioned only to emphasize a simple, fundamental collection practice - keep the account current. This can usually only be achieved by giving each account proper and constant attention. Follow up is key!
A successful creidt policy must:
- be tough yet flexible
- have specific guidelines of action
- be consistently enforced
Proper and consistent attention involves developing a collection schedule and following each step fully before moving on to the next step. It means that you never move backward or repeat a step in the hope of salvaging an account. If you have come this far, is it worth salvaging?
If the answer is yes, think about a cash only, pre-payment or COD option.
Comment Preview