Our best advice for timely collections is this: Create an accounts receivable policy and stick with it.
In creating that policy, the most important thing to do is schedule a series of letters and phone calls that build upon one another. Having a prescribed plan or a timeline in which to send collection letters and make phone calls will help you do so in an organized, fair and reasonable manner. Too few letters or calls don’t communicate the seriousness of the matter. Too many can be just as counter productive.
Sending the right amount of reminders at the right time can lead to successful debt recovery. The following is a timeline we’ve built based upon a 30-day credit term. Of course, you’ll need to adjust the timeline to match your credit terms.
| Day | |
| 0 | Invoice |
| 35 | Past due reminder letter |
| 45 | Past due follow up letter on smaller accounts or initial past due call on larger accounts. If time permits on smaller accounts, a call is better than a letter at this stage. |
| 55 | Initial past due call or follow up call depending on day 45 action |
| 65 | Termination of credit letter or choose one of the 60 day demand letters |
| 80 | Final Collection call |
| 90 | Final Demand Letter |
Critical to the success of this timeline is follow up. If your client makes a promise, follow up with a phone call if they fail to follow through. If things get to the point that a Final Demand letter must be sent, stay true to the actions you state in it. If you say that you’re turning the debt over to a 3rd party collection agency, do it. If you do not take the action that you’ve promised, you’ll lose credibility with the customer in future collections efforts.
C2C Resources can help you with our pre-formatted collection letters and call scripts through our web based record-keeping and management software called Profit Maximizer.