Free Commercial
Collections Billing Practices Advice
Swiftness is the key to collecting past due commercial accounts
because commercial accounts depreciate more faster than consumer
accounts.
In creating and implementing a billing system, a credit grantor should
recognize that time is the safest refuge of any debtor. The more time
they are given, the less likely they are to pay. Hence, sales documents
should be explicit about payment terms, return privileges, interest
charges on overdue accounts, guarantee and service costs.
Various Commercial Collection Programs Used A series of letters
used together with an account aging sheet or data printout will help to
track slow-paying accounts.
All systems should have an organized and mechanical follow-up of
accounts at regular intervals, for instance, 30, 60 and 90 days past
due.
It is essential to establish regular billing and commercial collections
procedures. Follow up on every account to the point where contact—or
lack of contact—with the customer indicates some alternative action
should be taken.
Help Commercial Collections From The Beginning Built-in
commercial collections controls at the time of sale often assist in
receivables recovery and help avoid delinquencies. These include such
items as sales contracts or a well-defined vendor’s purchase order with
conditions of sale clearly spelled out. Appropriate terms should be
printed on sales documents (contracts, invoices, statements) clearly and
without fail. Such terms will include notice of interest charged on
overdue accounts and discounts granted for prompt payment.
Internal control of receivables should include an aging which permits
periodic evaluation. This should fit together with commercial
collections routines. The time for referral to a professional commercial
collection agency should come from the aging at 60 or 90 days past due,
and sometimes sooner.
After a first statement has gone unheeded, start your commercial
collection procedure. Any program that permits three statements—or a two
to three month time lag—before the first collection step is taken will
result in a lower recovery ratio.
Any procedures for handling slow-paying accounts should emphasize speed
in contacting the delinquent bill payer. A company with a past-due
account on your books is probably in the same condition with a number of
other suppliers. The debtor may be on the verge of serious financial
trouble, and the creditor who moves first is most likely to recover
their money.
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