10 WAYS TO PREVENT AND COLLECT PAST DUE ACCOUNTS

When you've worked hard to get a sale, and then deliver your goods or services, you have a right to expect to be paid for your efforts. However, anyone who has been in business for even a month has learned that prompt payment is not always the case.

Often, accounts become seriously past due, or there are insufficient funds in your customer's account to cover his or her check. Besides becoming frustrated, here are ten steps you can take to fight bad debt losses.

#1 DEVELOP A DEFINED CREDIT AND COLLECTION POLICY
One of the major causes of overdue receivables is that the company has not defined to its customers and staff when accounts are to be paid. If customers are not educated that accounts are to be paid on time, then chances are, they'll pay late or not at all.

#2 OFFER A DISCOUNT FOR EARLY PAYMENT
Giving your customers an incentive to pay early is another way of assuring payment. While it is standard to offer a two percent discount within ten days, you can structure whatever type of discount suits your business. Then make sure that your customers know about the discounts.

#3 INVOICE PROMPTLY AND BILL REGULARLY
If you don't have a systematic invoicing and billing system, get one! You'd be surprised at how many customers delay paying simply because they haven’t been reminded. If you have to do it manually, set up a calendar "tickler file" to remind you to send out regular statements. Pick a day each (maybe the 3rd Thursday) and send out your statements. Or hire an outsourcing service to handle this for you. If you have a computer, there are software programs that can be of enormous help. Find a way to bill regularly. You can also contact MoneyQuest Corporation additional ideas.

#4 CONTACT OVERDUE ACCOUNTS MORE FREQUENTLY
There is no law that says you can contact your customers only once a month. The old adage "A squeaky door gets oiled" has a great deal of merit when it comes to collecting past due accounts from your customers. Here's a special tip: contact your late payers every 10-14 days. Doing so will greatly increase your company's cash flow.

#5 DEVELOP A SYSTEMATIC PLAN TO FOLLOW UP PAST DUE ACCOUNTS
Determine ahead of time what action you will take and at what time you will take it. Write out a visual "flow chart" of the steps you can take. Post this on your wall to remind you and your staff of what to do when you have a past due account. A sample plan might look like this for a company that has net 30 terms:

SAMPLE FOLLOW UP PLAN
DAY ACTION TO TAKE
1 Give customer opportunity to pay when
service is rendered or products delivered.
Prepare invoice with terms clearly stated.

30 Send 1st statement.

45 Make phone call/ Send letter.

60* Send 2nd statement.

75** Make phone call/ Send 2nd letter.

90 Outsource to MoneyQuest for systematic
follow-up

* Consider sending final notice at this time for service providers.
** Send to RX Business Solutions

Tip #1 - REVIEW ACCOUNTS ONCE A MONTH AND TAKE THE APPROPRIATE ACTION.
Tip #2 - GIVE YOUR CUSTOMERS THE QUALITY OF SERVICE AND MERCHANDISE TO JUSTIFY YOUR PRICES AND TERMS.

#6 USE YOUR AGING SHEET - NOT YOUR FEELINGS
Have you ever let an account age beyond the point of ever being collected because you "felt" that your customer would eventually pay? If so, you're not alone. Besides, are your terms of payment Net Eventually? While there certainly are a few isolated cases of unusual customer situations, the truth is that if you aren't being paid - someone else is being paid. That's why it's so important that you stick to your plan of systematic followup.

You'll soon know which customers intend to pay and which don't. Once you know where you stand, you can take the right action to get paid. First, you have to know where you stand.

#7 MAKE SURE YOUR STAFF IS TRAINED
If you or the members of your staff have not had any special training in bad debt recovery, get some. Not only are there specific skills involved in collecting money, there are also legal issues to consider. (If you're not aware of these laws, look for upcoming newsletters: "What's Your Legal I.Q. Regarding Collections", "Hot Water Collection Tactics That Can Get You Into Big Trouble", and "It's the Law- Fair Debt Collection Practices Act".)

Some of the skills that need to be acquired for collecting past due accounts and bad checks are:
• Dealing with difficult people
• Asking questions to get information
• Overcoming stall tactics debtors use to avoid paying
• Negotiation skills to resolve conflicts

Because collecting past due accounts is a communication skill, your collection staff could benefit from customer service and sales training.

#8 ADMIT AND CORRECT ANY MISTAKES ON YOUR PART
Sometimes your customers don't pay because they feel you've made a mistake. If you have, quickly admit it and correct it. Your customer realizes that mistakes can happen in any business. If you deny an obvious error, you'll just fan the fire of resentment your customer may already feel. When dealing with a customer who is upset over a mistake made by someone on your staff, the best thing you can do is listen to their complaint completely before making any comments. Accept the blame and diffuse the situation. If you try to ask for payment before your customer has a chance to air his complaint, you'll only compound the problem. Once you agree with him that it's your mistake, you've taken away any reason for further argument.

#9 HIRE A PROFESSIONAL
A professional collection service can motivate customers to pay in ways you simply cannot. There are different types of debt collection assistance from which you can choose. Some of your options include small claims court, collection attorneys, and collection agencies. Before using these expensive and time consuming options, consider using the services of RX Business Solutions. Your accounts can be collected for as little as 5% - no matter how much is owed or where the account is located.

#10 REMEMBER THAT NOBODY COLLECTS EVERY ACCOUNT
Even by setting up and adhering to a specific collection plan, you will probably have a few accounts that will not get collected. By identifying these accounts early, you will save yourself and your company a lot of time and energy. Even though a few accounts may slip by you, you'll find that the overall number of slow pay and no pay accounts will greatly diminish. That's a victory in itself!

ACTION TO TAKE
As you review each of these points, ask yourself these questions:
1. Which of these steps are we already successfully doing?
2. Which steps must we implement that we're not doing?
3. What should we do first to have the most impact on our situation?

Once you've settled on the answers, don't hesitate - INNOVATE!

RESOURCE INFORMATION
If you are currently experiencing accounts or checks that are aged 90 days or beyond, consider using the services of the RX Business Solutions. To receive complete information on how you can get your past due accounts collected for as little as 5% regardless of how much is owed to you or where the account is located, contact an RX Business Solutions Cash Flow Consultant for a no obligation accounts receivable analysis.