Collection Tip: Cutting Corners

Cutting Corners

Ever heard this saying? "An ounce of prevention is worth a pound of cure."

In the busy workplace, there always seems to be too much to do and not enough time to do it in.

Cutting corners may feel like a short term solution, but it can lead to long term collection problems.


Some common corner cutting cases we've come across:

• Relying on opinions and hearsay rather than on credit facts.
• Not insisting that a proper credit application be completed and signed - or failing to notice that it was not signed or properly completed.
• Not verifying information that should be verified before any credit is extended.
• Not investigating and dealing with disputes promptly.
• Failing to follow up on deteriorating payment habits.
• Ignoring overdrawn credit limits instead of reviewing the customer's ability to pay.

The Bottom Line:

Take the time to be thorough. Each and every corner cut throughout your sales or lending process can become a very large obstacle down the road.

Collection Tip: Patience vs. Payments

Patience vs. Payments

Unlike wine, collections do not improve with age.

We see a wide range in the age of overdue accounts that our clients list for collection.

90 Day accounts are popular, especially with our pre-collection service. But some clients keep unpaid accounts in their own office for a year or more, hoping for a miracle. From our experience this can result in collectable accounts becoming uncollectable.

We believe in miracles too, but it seems that for every miraculous payment there are numerous old accounts that “go bad” – when the customer is finally pushed to pay, there are problems or complications because the account is so old.

These problems may seem familiar: 

• The customer suddenly “remembers” problems with your product or service.
• The customer advises that he/she does not pay interest. You have financed the customer for nothing.
• Employees leave and customers claim certain deals and promises were made with a former employee.
• Your customer goes bankrupt, disappears, becomes very ill, or any of the multitude of other scenarios that render the account uncollectable.
• If you decide to take legal action, older accounts may be statute barred and your legal costs will be unrecovered on top of the balance already outstanding.
• Important documents can’t be located – they’ve been lost in the shuffle over time.
• You get frustrated and simply give up on older accounts.

 

 

The Bottom Line:

 

While some creditors wait patiently for a miracle, others are getting paid!

 

Contact us for more information or advice on how to balance patience vs. payments:

Email: Credit_AR_Guru@crmcanada.com
Toll Free: 1-800-267-0490

Check out our website for more information on end to end A/R solutions:

www.crmcanada.com

Collection Tip: Right Under Your Nose?

Right Under Your Nose?

Accounts listed for collection get larger all the time. Despite the larger balances, information customers provide is often disregarded – information that could prove very helpful later, if the account goes unpaid.

Examples of details that often slip through the cracks:

• Bank and account number from which payments were drawn. This can be found on cheques, and sometimes on credit applications and preauthorized payment forms.
• Possible alternate or updated business names (incorporated or otherwise) under which the customer appears to be operating.
• Letters or documents showing changes in the business, such as asset ownership, partners, etc.
• Change of address notice from the customer.

A good, up to date credit application is usually the most well rounded source of information. However, we’ve found the leads mentioned above can also be extremely useful when collecting an account.

The Bottom Line:

When an account is delinquent, have a closer look at the documentation you already have on file and see what you find. There could be essential information right under your nose.

Check out our end to end A/R solutions at www.crmcanada.com

Collection Tip: "No Big Deal"

No Big Deal

When your accounts receivable fall into these categories:

1. Terms of payment not kept
2. Promises for payment not complied with
3. Credit limits exceeded

These are serious, urgent issues.

“So the account is a bit slow, what’s the big deal?”

This type of thinking is the root of the problem. When you make accounts receivable calls with the “no big deal" attitude, it's reflected in tone and word. This gives your customer the impression that it doesn't matter to you if they pay or not.

The Bottom Line:

If the person calling for payment does not convey urgency, then how can the customer consider their payment urgent?

How many accounts remain unpaid because the customer considers the delinquency “No Big Deal”?