Make Debt Collection Easy
Managing debtors is important for maintaining a positive cash flow
. The following are points to consider when attempting to clear outstanding accounts and increase cash flow.Politely, persistently demand on time payments
Avoid giving credit whenever possible
Begin accepting credit cards for payment
Institute a credit policy and make sure all employees are familiar with it
Stay up to date with invoicing and debt tracking
Your credit policy should include the following:
The firms credit strategy
Terms of payment
Location of due dates on invoices
Reservation of Rights reasons you will refuse credit
Persons with authority to grant credit
Debt collection procedures and the person responsible for collections, and exceptions to the policy
Person responsible for reviewing new client credit histories
How credit limits will be determined
Person responsible for authorising credit suspensions and a suspension policy
Actions to be taken for bad debts
Invoicing is a crucial aspect of debtor finance and cash flow management. Invoicing should occur upon completion of the service. Invoices should be complete and free of errors so that there is no reason payment can be delayed. Invoicing delays negatively affect cash flow; conversely, timely billing will have an overall positive effect on your cash flow.
Collection procedures should be pursued early and often. Debt collection is yet another way to build client relations, and a positive attitude when attempting to collect on invoices is important. Monthly statements and mass mailings may not be as effective as the personal touch. The telephone is often the better choice. Deal directly with the person responsible for approving payments and maintain records of all contact. Do not allow debts to become too old, the longer the debt lingers the less likely payment will be received.
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