Benchmark Business Group

The Heart of Your Collection System

February 23, 2015

The Heart of Your Collection System

The "heart" of your collections system should be to actively communicate and partner with customers that have gone beyond the agreed payment terms. Here are a few items to consider for your collections system:

  • Define what your collection standards are and make sure to perform accordingly 100% of the time. This means that the "trigger" for original contact and all follow-up contacts are clear in your system. The Trigger for collections should be set early in the process.  Honor your customers by proactively communicating with them and remember the longer you wait to contact and begin the collections system the more difficult it becomes to collect.
  • Endeavor to discover the reason why your customer has not paid. Don't begin the collections process by assuming they are avoiding the bill.  There might be a legitimate reason that they are late.  It could be something as simple as they forgot to something as complicated as a death in the family.  Be curious and ask questions so that you can understand their situation and help them discover a solution.
  • Be a Problem Solver.  Once you know their situation be prepared to brainstorm solutions with them.  For instance, if they are struggling with money have payment options that are easy and will work with their situation.  Collecting $20 a month is better than collecting $0.  If possible set such payments up as an automatic reoccurring payment until their situation changes and the client can pay off their account.  In addition, if the customer is upset about the service, be prepared to listen.  They might have a real issue that once solved will allow you to collect easily. 
  • Be clear and firm.  Make sure your customers understand what they are agreeing to; this can easily be done by asking them to repeat what they have agreed to; possibly sending them an e-mail with the terms and having them respond that they received it and agree to the terms. Be firm and clear on expectations but not rude or threatening. 
  • Don't give up.  Calendar specific days of the week or month to focus on your accounts receivables. Be consistent in your collection efforts as a sale is not truly a sale until you have collected the money.  Collections can be turn-key and easy to execute or uncomfortable and thus easy to push aside.  Having your system in place (the first bullet point) ensures that you are not giving up simply because it is difficult.  Your system for collection should outline how many follow ups you have, what to do when an account reaches certain milestones, and finally when to stop trying to collect and look for other alternatives.

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