In this challenging economy some people delay payments for as long as they possibly can in order to provide for their families and take care of their personal needs until such a time they have enough money to pay back their creditors. Unfortunately by the time they get around to paying you-their creditor- they can hardly afford the full amount due to interest charges and the fact that they didn’t have enough money to start of with.
Finding creative and effective strategies for credit and collection is essentially important for the growth and potential of your business. If properly applied can help firms reduce Accounts Receivable balances and generate a substantial cash flow.
With finding creative effective collection strategies you need to remember that your task is to apply payment pressure without creating undue friction that can negatively impact customer relations and decrease your businesses cliental. Here is a list of creative credit collection strategies your business can use to make sure you recover as much money from debtors as possible.
- Locate ‘hard to find’ debtors
Make sure that you have an up to date list of your debtors and their information. Track down their physical address or email address and send them their monthly statements as frequently as you can. This will serve as a reminder to them and will hopefully nag them long enough to settle the debt they owe you.
- Priorities your collection strategy
Improve your collection efforts by identifying accounts with the highest payment potential and also those that are steady with their payment strategies; this will enable you to recover some money to keep your business afloat.
- Monitor unpaid debt
This is money owed to you so you should in actual fact be going all out to try and recover as much of it as you can. Set monthly reminders to check who hasn’t paid and when they should be paying and also send them a reminder. It’s also important to know when customers who’ve gone into arrears become solvent. Employ a system that will notify you once the customer has recovered their ability to pay so you can immediately return to working the account and collect the unpaid balance
Many businesses view credit and collections as a necessary evil designed to protect against bad debts and when a system is in place this can be very effective to keep your business running for many years to come. Do the checkups and send the statements to show exactly how much is due to you and by when this amount is payable. Remember to also update your debtor’s information so that you are not just sending statements to an address or email they do not use anymore.