Chapter 7
When Your Late-Paying Customer Turns into Your Debtor
In This Chapter
Creating a sense of urgency for payments
Using frequent payment reminders effectively
Establishing a good paper trail
In a perfect world, your customers pay their bills on time and you have terrific cash flow with which to pay your company’s bills. In the real world, inevitably some of your customers don’t live up to their obligations. At some point, despite your polite reminders, modest pressures, and even incentives for payment, your late-paying customer becomes your debtor. When that happens, your approach to collections must also change. You have to take things to the next level. You need to motivate your debtor to bring its account current or pay it off entirely.
Time is money: The longer the debtor is delinquent, the less you have an opportunity to recover money on that account. To put it in financial terms, after six months, a delinquent bill is only about 50 percent recoverable. After 12 months, the bill is less than 10 percent recoverable. Picture a chart with an arrow dropping at a 45-degree angle. That’s pretty much what it looks like when you graph the collectability of your accounts over a one-year timeline.
As your accounts become 30, 60, and 90 days past due, you, as a collection professional, need to give them your special attention. You don’t want to be the creditor who’s hoping for a payout when the odds of recovery drop below 10 percent.
In this chapter, you discover how to create ...
