Making Sure You Get Paid
No matter the size of your business, unpaid accounts directly affect your bottom line, and can make the difference between sustainability and demise. Every accounts receivable department should have a plan in place to implement as soon as an account becomes delinquent, whether your plan is to outsource collection activity or proceed in-house.
If you plan to handle matters yourself, be sure to consult with a professional debt collection law firm both before you begin and as questions arise along the way to ensure your collection practices comply with existing regulations. Also consider whether in-house collection efforts are the most cost-effective use of your or your employees’ time.
Where should you focus your collection efforts? First, set goals that are reasonable, and establish a clear procedure and timeline to encompass the following:
- Consistent Record-Keeping. As you move from one step to the next in the collection process, be sure to keep clear, consistent, dated records of all communication with the customer, including summaries of telephone calls and meetings. Written records are the best way to prove what was or wasn’t promised by either side along the way.
- Put your customer on notice. You should give your customer written warning that you are stepping up your collections efforts. This is often accomplished via a ‘demand letter’ where you state the amount owed and the action you intend to take if the account is not paid within a specific time.
- Make the calls. Collection calls may not be your favorite thing to do, but phone calls are generally more effective than demand letters. (Although the letter is important for record-keeping and notice purposes.) You are more likely to be paid if you follow the demand letter with phone calls to the customer.
- Pursue legal action if necessary. Your procedures and timeline for collections should indicate when is the right time to pursue legal action to collect bad debt.
- Move quickly. The fresher the debt, the more likely you are to be successful in your collection efforts. Don’t let an account linger in limbo because you don’t want to offend the customer or because you dislike collection activities. A just debt is a just debt, and you can help mitigate any customer loyalty damage by being courteous and professional.
If your business needs help with the collections process at any stage, consider Seidberg Law. Seidberg Law is a professional debt collection law firm centrally located in Phoenix, Arizona. Seidberg Law offers services statewide to assist clients in collecting delinquent accounts from borrowers in Arizona. For more information, contact Seidberg Law today at (623) 258-4397 or visit us online at www.seidberglaw.com/.
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