Debt Collection Mistakes Can Prove Costly
Eleven Commercial Collection Errors You Should Avoid
If you sell on open credit terms, you need to plan on having to expend time and resources collecting from those customers that don’t pay when due. No matter how much effort you put into evaluating customer credit, some customers will not live up to your expectations. Late payments and even non-payment are simply inevitable. In addition, customer situations change, and it is impossible to keep up, especially when you have a growing customer base.
For these reasons, you need to have a credit policy that balances your credit analysis efforts with your collection efforts. There are diminishing returns as you increase the amount of credit analysis and depth of credit monitoring. Doing too much of these preventative activities will leave insufficient time and resources for collections. The inverse of not doing enough prevention is a growing collection problem.
By the same token, your collection efforts must be focused. You need to be doing the right things. We support a strategic approach to collections that factors time and resources against the context of the personality of your AR portfolio so that your collection efforts are as efficient as possible. This also requires that you don’t set yourself further behind by making mistakes collecting your debts. Time is as much an enemy as anything else when you are charged with collecting past due accounts receivable (AR), so it is crucial you don’t waste time by making mistakes, which will also serve to elongate the collection process.
If you are concerned you may be making mistakes in your internal debt collection process, check out this list to see where you may be going wrong:
Lack of Primary Documents
Poor Record Keeping
Ambiguity About What Is Owed
Failure to Document All Communications
Ignoring Customer Disputes
Unauthorized Disclosures
Overly Aggressive Collection Tactics
Being Inflexible
Ignorance of the Law
Not Using a Reputable Collection Agency
Inadequate Training
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