Many businesses scramble to collect on overdue bills. Lanny Daise, district manager for TekCollect, a collection agency based in Columbus, OH, offers these collection practice tips:
- Head off problems with a good in-house accounts-receivable program. Along with an invoicing system and a policy for payment terms (net payment on delivery, within 15 days or by 30 days), custom operators should require potential customers to complete credit applications and/or provide bank references, Daise advises.
“As the one granting the credit, you have every right to ask for these things,” he says. “Don’t you have to fill out a credit application if you want to open a new account at a bank or the implement dealer? Why shouldn’t you ask your customers to do the same?” That allows operators to screen potential clients while showing them they mean serious business, he says. “Many of them will respect you more for that.”
- Act quickly on overdue accounts. If customers are having trouble paying on time, they’re most likely not paying other creditors, either. If customers’ financial situations deteriorate to where they end up in court, creditors will line up to get paid. In many states, the creditors in line first get paid first.
“Age is the biggest deteriorating factor in the collectability of an account,” says Daise. “If you allow an account to go 30 to 60 days beyond what’s specified in the terms without stepping up your efforts to collect, you greatly reduce your ability to recover your money.”
- Consider turning collection chores over to a professional. Many businesses try to do their own collections in-house to save costs, Daise says. But an in-house approach requires more clerical time and takes time away from managing other aspects of the business.
“We’re trained to get results,” he says. “We know what to say to people to motivate them to pay. We try to start with a soft-sell approach because we don’t want to jeopardize our client’s long-term relationship with a customer. But if it becomes necessary, we also know when and how to initiate legal action.”