NRS | Collection Guide

Don't Assume Customers Know Your Credit Policies
While there are usually established trade practices in every industry, it is sometimes the differences that make customers choose one supplier over another. It is important that your customers know what your credit policies are to eliminate misunderstandings. Reiteration of the policy, payment is overdue, is a first step in facilitating payment.

Know Your Customers Individually
As part of doing business, you undoubtedly maintain credit files on each of your customers. Credit should never be extended to a new customer without first ascertaining a company's credit reliability. Once credit is extended, it is important to maintain accurate and timely records on an account's payment history. If records indicate a deviation from past payment patterns, and especially if payments become unusually slow, immediate follow-up is warranted.

Keep Your Credit Records Current
Companies don't remain static. Changing market conditions and management directions can abruptly alter the course of a company's health and operations. It is always prudent to keep abreast of trade reports on specific companies, as well as industries.

In Periods of Uncertain Economic Conditions, Tighten Your Collection Procedures
If business conditions are uncertain, it is time to review and tighten up your collection procedures. You cannot guard against unforeseen events, but you minimize your company's chance of loss by maintaining rigid adherence to your collection policies. A good place to start is by revising your collection letters - make them stronger and more action - oriented.

Try to Discourage Extended Payment Terms
Screen requests for extended payment terms carefully. Direct your sales department to discourage these requests so that they are kept to a minimum.

Pursue Partial Payments with Requests for the Balance due
Generally, accounts believe that by making partial payments, they can "get the heat off." While such payments do show good faith, they should slow your effort to collect the complete amount due. The best practice is to acknowledge partial payments promptly and follow-up with communication to accelerate payment of any balance remaining.

Shorten Your Collection Schedule
Shorten the time period after an account's due date for continued extention of credit privileges. This "shock treatment," communicated to a principal, can sometimes exert needed leverage on accounts, particularly those accounts who rely heavily on the supplies or services of your company.

Keep Your Lines of Communication Open
While you are talking, there is always hope. But make sure you are getting through to the right person at your customer -- the decision maker. Try phoning this person, offer to visit the customer to discuss the balance due and establish a payment schedule.

Try to Resolve Disputed Matters
If the basis of non-payment is a dispute over quality of merchandise or service, price or delivery, a mutually agreeable settlement should be arrived at promptly. The customer may use a minor dispute to withhold a substantial payment. Insist that the undisputed portion be paid immediately, indicating that the balance will be negotiated.

What to do When All Else has Failed
Your judgment will tell you when you have exhausted all the means at your disposal to negotiate a satisfactory payment while maintaining an account as a customer. At this point you can take positive action by referring the account to an agency certified by the Commercial Law League of America.

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