Recognizing Why You Are Being Paid Past Due Is Key to Changing Customer Behavior
As published in The Virtual Credit Manager
There are any number of reasons a business may pay beyond your terms of sale. Some of the reasons for paying slow are more serious than others, but they all impact your cash flow and your collection efforts.
There are several keys to effective past due collections and they start with your order-to-cash process. You first must meet the customers expectations in terms of the delivery of goods and services as well as provide them with a timely and accurate invoice. Do that and you eliminate a lot of potential collection issues.
When collections do occur, you then need an organized process that gives priority to the largest balances, the riskiest past dues, and following up on previous collection activities. The importance of going after large balances and risky accounts first should be obvious, but follow-up is also critical so as not to waste your prior efforts. If a customer promises to pay by a specific date and payment is not received by that date, unless you immediately follow up you are wasting your previous collection efforts. Consistent follow-up holds your customer accountable. Once you start collection activities on an account, constantly increasing pressure on the customer to pay will deliver the best results. Click here for full article