Debt Collection Strategies
in Current Economic Downturn

by Daniel L. Daughdrill
(Moneta, Va., USA)

We have enjoyed a customer base that has for the most part offered only small problems when trying to collect past due debts in years past.

With the severe economic downturn in the past year or so, we have have seen the number and amounts of unpaid balances soar. At a point some months ago we reached a critical situation in regards to our outstanding accounts receivable.

Many accounts were allowed to slide as far as 120 days past due based on the customer history. We just knew that we would be able to collect with only minor adjustments for carrying the accounts for an extended amount of time.

When we finally woke up to the fact that many of our customers were having such dramatic losses that they might not recover, we were shocked and set about to establish policies and procedures designed to collect the maximum amount of past due accounts receivable.

Rather than making threatening calls regarding the customers' past due balance, we scheduled appointments at the customers office to discuss the current business atmosphere and what we might do to help.

Any valid idea could be put on the table. We arranged loans with monthly payouts for total past due balances. In certain cases we accepted tangible assets as payment.In some extreme situations where the customer was solvent and only experiencing cash flow problems, we accepted stock or partial ownership in return for outstanding balances.

This approach has been successful and while past due balances are now slightly higher than normal, we have returned to an even keel.