Help the Commercial Debt Collector at the outset

Number 6 in a Series

Built-in debt collection controls at the time of sale often assist in receivables recovery and help avoid delinquencies.   In every collection involving the extension of credit, anticipate early the need to possibly involve a Commercial Debt Collector.  These include such items as sales contracts or a well-defined vendor’s purchase order with conditions of sale clearly spelled out. Appropriate terms should be printed on sales documents (contracts, invoices, statements) clearly and without equivocation.

Such terms will include notice of interest charged on overdue accounts and discounts granted for prompt payment. Internal control of receivables should include an aging policy that permits periodic assessment. This should mesh with collection routines. The average break-off point for referral to professional commercial collectors should come from the aging at 60 or 90 days past due.  Some circumstances, however, may require a more timely referral. After a first statement has gone unheeded, start your collection procedure. Any program that permits three statements—or a two to three month time lag—before the first collection step is taken will result in a lower recovery ratio.

Any procedures for handling slow-paying accounts should emphasize speed in contacting the delinquent bill payer. A company with a past-due account on its books is probably in the same condition with a number of other suppliers.

The debtor may be on the verge of serious financial trouble, and the creditor who moves first is the most likely to recover their money.

This series of articles come from a fantastic publication put out by the IACC  (International Association of Credit Collectors).   It is well grounded and fundamental advise that should be ready by any professional involved in credit collections.