The Squeaky Wheel gets the Grease!

The Squeaky Wheel gets the Grease!

December is a tough month to do collections. With the economy moving along sluggishly, and unemployment still recovering from the recession, it is difficult to get your customers to pay on time. It is however, a good time to review your internal practices and evaluate your success for 2012. You can also review your weaknesses and where you could have spent more time and energy into collecting from your past due customers.

The old adage “the squeaky wheel gets the grease” really fits collections in todays economy. The business that stays in constant contact with their customers is the most likely to get paid first. By creating internal systems that allow you to contact your customer when they fall behind, and to continue efforts to reach them weekly will increase your collections and decrease your bad debt write offs. Using a contact management software that allows you to schedule calls and merge the data into letters is the most effective way to handle past due accounts. Creating time in your staff’s schedule is also essential. Putting aside 1-2 hours twice a week that is solely dedicated to collections is a small expense to pay to make sure your receivables continue to pay on time. Now this time is dependant on the number of past due accounts your staff is handling. You must make sure that your staff is trained on how you want them to handle the past due accounts and how often you want them to be worked. This is where creating policies for your collection process is extremely important. See our Collection Policies

If you have over 20 accounts that are over 30 days past due, you may want to consider outsourcing your collections. We have designed programs for clients that are very cost effective and generate additional cash flow in a short period of time. Our rates range from 3 to 10% of what is collected, which means over 90 percent of what we are able to collect is going right into your bank account to increase your immediate cashflow. Visit Our Services  for more information on outsourcing.

Another way to increase your cashflow is to review your old receivables. You can usually find some money in your old collection accounts. If the account is less then 6 years old, it never hurts to revisit the possibility of collecting it. You can pull your old reports of accounts that were closed in 2007 through 2010 that weren’t bankrupt or deceased and put together a list of accounts that you can revisit through internal efforts or to place with an agency. You will pay a higher contingency fee (40% with PRP) because they won’t be as collectible, but there could still be money there for your efforts. I have put together some of our numbers to show the value that can be acheived with placing your accounts with a second agency. Click here to read more…

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