Time spent collecting old debts is time that could have been spent working on growing your business in a plethora of different ways.
Since time is such a valuable commodity to everyone, it makes sense that you may want to consider investing a little time upfront to reduce the amount of time you will have to spend down the road writing collection letters, making collection phone calls, and even appearing in court.
Here are some simple ideas that can pro-actively reduce the amount of time you have to spend collecting outstanding debts:
Discuss Payment Terms BEFORE the Purchase
This might seem completely obvious, but not all businesses directly discuss the payment terms before a purchase is made on credit. This can be a symptom of rushing to close a deal quickly, or just a simple lack of attention to detail. Either way, it is important that you explicitly state to the debtor the expectations your have for them in terms of repayment.
Make Sure Your Records Are Correct
Another aspect of debt management that many businesses rush through is managing their records regarding outstanding debts. This is a classic example of an important, but not urgent, task that can get pushed to the back burner day after day. After a while, the file cabinet becomes a jumbled mess that is completely ineffective when you actually need it.
Take a few minutes regularly to make sure that all of your debt records are correct and up to date. Make it a part of a regular routine and it will save you hours of headache down the road.
Know Your Billing Policies
This is another obvious situation that so many people rush through. Take the time to learn and digest all of the details of your credit and repayment policies. That way, you will be well versed and able to make a quick decision in any debt-related situation. This can be helpful at any point in the debt process from the initial purchase to a courtroom appearance.
Follow Your Collection Plan
If you don’t already have a debt collection plan in place, GET ONE! Once you have a plan, you have to actually follow it!
Following your debt collection plan can be easier said than done in the midst of actually running your business. Once again, this is the type of thing that can easily be set aside to deal with “later.” However, if you do not stick to your collection plan, you are opening the door for debtors to slack on their end of the deal as well. Make sure you follow through with any and all actions that your debt collection plan details.
Train Your Collection Staff
Training of any kind can be expensive and time consuming, but a little investment in your staff might save you hours of your own time down the road. Training your staff to properly handle commercial debt recovery by following your collection plan can actually remove you from the process and let you focus on your business.
Also, a properly trained collection staff is far more likely to actually collect payments than a staff that is making it up as they go.
If you do not have a staff that is capable of handling debt collection, you may want to consider hiring a debt collection agency. If you decide to go this route, make sure that they are well versed in the collection laws in your state. The California debt collection laws, for example, are much different from the debt collection laws in other states.
Make Debtors Want To Pay You
Another easy way to save time collecting debt is to invest a little time up front making your debtors want to pay you. This could mean something as simple as a conversation that allows them to see you as a real person who would very much like to be paid for his product or service. Investing a little time up front to build a relationship can go a long way towards making a debtor want to make good on their debt.