As a business you want to ensure that your cash flow is up to date and that you are collecting any debts effectively. This is where a debt collection process comes in. An effective process is especially important for managing bad debt and ensuring your business maintains good cash flow.
However, it can be a difficult process to handle well when your customers or clients are struggling to pay their invoices. What are some ways you can ensure a successful debt collection process?
#1 Be prepared
Ensure you have all information about your customer or client on hand and on file and make sure you know the customer well. Ensure you have copies of invoices, contracts and any other information that will help you communicate effectively with them.
#2 Have a dedicated account manager
Have someone in your company who is trained to handle every account and every step within the debt recovery process. This includes tasks such as checking contracts, sending the letter of demand all the way through to payment reminders and handling the legal process.
#3 Communicate at the right time
A big question that pops up when it comes to debt collection is how should I approach the client? A bigger question should be when should I approach the client? Your timing is especially important when it comes to having an effective and successful debt recovery process. Try reaching out to your clients the day after the invoice has fallen overdue to follow up and make sure they received the invoice. Document your conversations for future reference.
#4 Ensure your terms are agreed upon
Ensure that your terms are agreed to by placing an emphasis early on and making sure all parties sign your terms and conditions. Having set clear expectations and responsibilities will make the debt collection process easier and smoother.
#5 Implement a debt collection software
Debt collection software can help you reduce a lot of time spent in the debt collection process. It can help you automate almost all the steps in your process and give you smart insights to help you make the right decisions.
365 Collect is a Microsoft-powered solution that streamlines and automates debt collection and recovery. Once set up on your system, it will evaluate your database of accounts and send invoices before payments are due. You also get the ability to customise, and tailor the message and time between communications to suit the way you want to communicate with your clients.