Just think, if more clients paid you in a timely manner what you could do with the money, not to mention the time. Give your business the gift that keeps on giving: Learn the secrets of increasing in-house collections and watch your cash flow grow. Here’s this NY Collection Attorney’s top 5 tips to increase in-house collections.
Tip #1 Analyze Receivables
Your receivables can tell you a lot more than who owes you what. A proper review can identify costly errors. For example, does your company repeatedly order goods, ship or install goods before receiving the required deposit or installment payment? Do you send technicians out to service an account without first verifying and obtaining payment? Although you may know these misfires occur, a look at your unpaid receivables will tell you how much they cost you.
Review the late-paid or unpaid receivables. Look back two years, if you can. Analyze the common denominator in the receivables. For more information on this tip, click here.
Tip #2 Get Rid of Dead Wood
Time is your enemy when you’re trying to collect debts. Statistics show that invoices are most collectable when they are fresh.
To increase the likelihood of collecting aged receivables: Proactive is the name of the game. Move forward and enforce your rights. Accomplish that through the efforts of a collection professional. Whether you require litigation, arbitration, or mediation, you must consider the Court’s delay and its impact on collection efforts. So, get going.
Tip #3 Revise Your Collection Policy or Get One
Expect the best but prepare for the worst.
A collection policy begins at the point of sale. Make sure you have the information necessary to protect yourself in case your client doesn’t pay. The best time to obtain information and establish expectations with a customer is at the beginning of the relationship. A collection policy should be part of the sale. Warranties, guarantees, terms and conditions, and other checks and balances that accompany the sale, delivery, installation, and service will insure the best chances for payment.
For example, will you ship the goods without a deposit? Will you continue to service the client if they are not paying as agreed? Does your contract provide for you to stop work if the customer is not paying according to plan? Can your client claim non-payment due to a standard deviation in the industry? Non-payment is much less of a problem if you have the proper documents for a new client to sign.
What about those that just don’t pay? Your proactive collection policy will incorporate all remedies that are available to you based on your contract, your industry and more.
Tip #4 Update Your Credit Policy
They say things change in a New York minute. That has never been truer than it is today.
Economic fluctuations, world events, change in customer preferences, natural disasters, politics, and so much more…. Flexibility and frequent updating will keep your credit policy viable. Clients’ financials change as do yours. Take a look at your credit policy. Does it reflect today’s realities? And what about the situation a year, two or three from now?
Tip #5 Is It Time to Outsource?
Run the numbers. Does it still make sense to handle collections in-house? Is it time to outsource some or all? Consider aligning yourself with a strategic, debt-collecting partner.
If you could benefit from assistance updating or creating documents such as credit policy, terms and conditions, collection policies or others, give us a call or send us an email. We’re experienced in helping companies and organizations improve their collection outcomes.