You are already aware of the need for a strong Credit Policy to keep your company’s fiscal health in order, but have you thought about your Debt Collection Policy?
While your Credit Policy should support successful accounts receivables collections, you still need to consider a carefully written Debt Collection Policy to insure that success. The policy is a predesigned procedure for accounts receivable to follow to insure maximum recovery starting with invoicing and, should the need arise, through to outsourcing to collection counsel. Debt Collection policies are a must for all successful businesses, regardless of size and should not be borrowed from other businesses, but rather custom designed for your unique business practices.
A good collection policy is written with an understanding of the workflow of your business, customer base, industry standards and your ability to finance receivables. The goal is to convert receivables to cash in the shortest possible time and to decrease the overall volume of receivables. All related actions should be executed with a firm yet professional demeanor.
Frank, Frank, Goldstein & Nager, P.C.’s experience in debt collection and collecting receivables, has been ongoing since 1940. We offer advice to our clients about collections and develop collection policies on our client’s behalf with their particular business in mind.
When we are asked to design a collection policy, the first order of business is to sit down with the CFO or Owner to learn about the company’s business process from sales through to invoicing. We review of the documents exchanged between the parties as part of the review as well as client’s internal workings. This exploration and examination provides us with a solid understanding of what takes place between you and your customers and gives us the insight necessary to develop a specific debt collection policy for your company.
Although a collection policy is separate and distinct from a credit policy, the two are intertwined. Along with your credit policy, we review the underlying documents exchanged between the parties as a necessary part of the review and discussion. The documents used during your transactions include, but are not limited to contracts, proposals, change orders, invoices, financing statements, credit applications and guaranties. We review these documents to insure that they are drafted to your benefit should a customer fail to pay.
Through this careful and thorough evaluation and examination of the business process and documents, we are able to identify changes to be made before invoicing. Although these changes are “pre-collection”, our clients have experienced a marked decrease in the volume of aged accounts receivable.
Collection policies are, by definition, attempts to collect the debt. Most often, we recommend that you begin the collection policy before the issuance of an invoice. This way you have a policy in place to call upon should the need occur.
Collection policies are tailored to your business, industry and financing requirements. Our ultimate goal is for you to have a process in place to decrease the volume and amount of receivables, increase your rate of collection and to have a relationship in place with collection vendors to move a case forward, toward payment, should the need arise.
Video on Collection Policy:
Get in touch now to arrange a consultation with us to find out how we can help, or arrange for us to help you with your Collection Policy. We remain available to sit down face to face with you and your team and tailor a collection policy for your specific benefit. It is not a ‘one size fits all,’ off the shelf program, but specific to your business needs.