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Sample collection policy.

 

 

If you've tried everything and you still can't collect on a bill, it may be advantageous to hand the account over to a professional collections agency. When and how you do this will affect your chances of recovering the amount due.

Action

Mail or email a friendly reminder

When On payment due date
   
Action Mail a firm letter requesting payment
When Two weeks following due date
   
Action Telephone the customer. Speak to owner, CFO or manager
When Three weeks following due date. 

Try to determine the cause of non-payment and resolve the issue. Is the customer dissatisfied with your service or in a temporary financial bind? Consider the value of maintaining a good relationship with the customer, as well as the need to collect what youíre owed, and be prepared to offer assistance. Resolve customer complaints or suggest a payment plan. Insist on a firm schedule, and put your agreement in writing. Itís important to record the date and details of your phone conversation, or ask your customer to make his demands in writing. Remember to document this action in your records.

   
Action Mail a collection notice
When Five weeks following due date if the customer has been non responsive 

Collections notices are most effective when they are brief and aimed at a single purpose. Be definite, concise, and specify a last-chance date for payment. Remember to document this action in your records.

   
Action Send account to a professional collection agency
When Seven weeks following due date

 When to use a collections agency

 Collections become increasingly difficult, expensive, and unlikely the longer a bill has been outstanding. Getting help from an agency early in the process for appropriate cases can make the difference between successful collection and a bad debt write off. Remember, sending an account to collections without good reason may alienate your customer. Do all you can to make it easy for the customer to pay prior to handing over the account.

The recalcitrant, argumentative, or non-communicative debtor is an ideal candidate for timely use of a collections agency. You should also consider using an agency when:

  • a customer is unresponsive to reminder notices
  • the customer makes repetitious, unfounded complaints
  • the customer denies responsibility for the obligation
  • account delinquency coincides with serious marital difficulty
  • the customer has multiple delinquencies and frequent job or address changes
  • obvious financial irresponsibility is evident
  • the debtor has moved to a new location
  • the debtor fails to keep in contact
  • your company has many bad debts or delinquent A/R

Professionals trained to deal with difficult debtors track down overdue payments, allowing you to concentrate on running your business. Most agencies make collections via letters and phone calls, like you would. But third party intervention sends a powerful message that you are serious about getting paid. 

Debt collectors have special resources to help them locate customers that have moved. Agencies can also affect the credit standing of the debtor, giving your customer another good reason to pay. By law, debt collectors must adhere to strict standards that limit the methods they can use to collect on a debt. 

 
 

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