Cash Flow Issues?
3 Debt Collection Techniques That Will Improve Your Business' Bottom Line

Effective debt collection techniques are necessary to any business, regardless of the state of the economy. Knowing how to persuade your customers to pay their delinquent, past due accounts on time will increase cash flow to your business. After all, as a business owner, you have debts to pay as well. Absent the necessary adequate cash flow, you are risking falling behind on your own bills and commitments. This can lead to problems with your vendors and suppliers. Or to the loss of favorable credit terms with your banker or lender.

Knowing how to master your debt collection techniques can spell the difference between surviving and thriving in your business.

Listed are the top 3 debt collection techniques that will increase cash flow to your business:

1. Change Your Payment Terms

Be sure you have clearly stated what your payment terms are on your invoices or on any quotes you've provided. Many business allow 30 days or 60 days until payment is due, but have you thought about reducing your payment terms to 14 days or 21 days?

Amending your payment terms can mean that you could potentially be receiving your money sooner rather than later. It also means an unpaid account becomes delinquent within a month so you're within your rights to commence collection services before too much time has elapsed.

2. Written Statements-Reminders & Follow Up Calls

Once an account goes past due, you should send a reminder statement to the delinquent customer to encourage payment of the past due bill. Be careful in your letters, and use gentle language, as the laws governing debt collection techniques are quite specific. Also, by sending written correspondence means you have a record of your attempts at collecting the past due account, in case future issues arise.

You should also call the customer to remind them of their outstanding debt, as well as establish a time frame when you should expect payment. Again, your choice of words and overall communication needs careful consideration, to avoid the appearance of harassment.

Debtors are afforded protections under the Fair Debt Collection Practices Act (FDCPA), so make sure to adhere to these guidelines, regardless of the method of contact you choose.

3. Third Party Collection Agencies

Sometimes no matter what you do, your debtors still wont pay their debts. Even if they are experiencing severe financial hardship of their own, this doesn't help your business if they've received goods or services in good faith and then suddenly found themselves unable to pay the bill.

If you've exhausted all other avenues of debt collection options, then it may be time to call in a third party collection agency to pursue the outstanding balance on your behalf.

Collection agencies are professionals in their field of expertise. This means they're already well aware of the specific rules and regulations that surround the debt collection industry. They are able to act on your behalf to recover any delinquent payments owing to you and the debt collection techniques they use are specifically designed to bring cash flow into your business sooner rather than later.

About The Author
David Montana is a recognized industry expert, consultant and writer in the area of debt collection services. David would like to hear from you, and invites you to write about and share your success stories, as well as challenges, frustrations and problems with debt collection techniques.
Content is copyright of David P. Montana and “DebtCollectionSteps.com” - © “DebtCollectionSteps.com” 2000-2009. All rights reserved.

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