10 Steps to Increase Your Collections!

January 3, 2012

In today’s troubling economy, collections may be a problem. How often have you said, “I might as well go home early, if I’m not going to be paid!”

Well, by utilizing the following ten steps, you will be able to increase your collections many fold.

YOU MUST HAVE A DEFINED COLLECTION POLICY:
Your collection policy should be written. You must not deviate from that policy! The policy should be simple and it should be understood by all of your employees. The policy should include billing information, account information, credit terms, etc.
CONSIDER OFFERING YOUR CUSTOMERS A DISCOUNT FOR EARLY PAYMENT:
Customers are more apt to pay quickly if you give them an incentive!
YOU SHOULD INVOICE PROMPTLY AND SEND YOUR BILLS REGULARLY:
If you wait too long to invoice, your customer may forget about the services you provided for them. Your statements should be sent no less often than monthly!
YOU SHOULD CONTACT OVERDUE ACCOUNTS FREQUENTLY:
If you do not contact overdue accounts, they are not going to pay you! After all, it’s the “squeaky wheel that gets the grease!”
DEVELOP A SYSTEMATIC PLAN TO FOLLOW UP ON PAST DUE ACCOUNTS:
Your plan should include a customer contact (e.g.: by telephone or letter). You might also consider visiting the customer’s place of business. After a certain period of time, the account should be “turned over” for collection to either a professional collection agency or an attorney.
UTILIZE AN AGING SHEET TO GET PAID, NOT YOUR EMOTIONS:
If an account goes beyond sixty (60) days, pursue your collection remedies without becoming emotional! If your aging sheet indicates a “stale” account, regardless of your “friendship”, pursue the account vigorously.
TRAIN YOUR STAFF:
Each of your employees must be capable of responding to a customer credit inquiry. Your employees should know what to say in order to effect a collection. They should know the terms that you are willing to extend. Don’t let the “buck” be passed exclusively to your collection personnel. All of your employees must work together to collect your receivables.
IF YOU MAKE A MISTAKE, ADMIT IT AND CORRECT IT PROMPTLY:
Oftentimes, bills are not paid simply because there is either a mistake, or the perception of a mistake. If your customer indicates that there was an error, carefully review the facts. If you made a mistake, correct it, advise the customer, and re-bill them immediately. If there is a dispute as to your services, consider compromising the bill (e.g.: a small reduction) in order to get paid promptly.
USE A THIRD PARTY COLLECTION SERVICE, ATTORNEY, ETC:
If all else fails, you should refer your accounts promptly to either a collection service or an attorney in order to effect collection. You are better off receiving a “partial payment” on an account (i.e.: after payment of the collection agency or attorney’s fees) rather than carrying a “bad” debt forever on your books!
AND LASTLY – REMEMBER, NOT EVERYONE COLLECTS ON EVERY ACCOUNT!
Please contact me should you have any questions.

Leslie E. Chayo, Attorney at Law
By telephone 310.277.6337
By email chayolaw@aol.com

Law Offices of Leslie E. Chayo
9401 Wilshire Boulevard, Suite 1250
Beverly Hills, California 90212

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