Debt Collection Techniques:
Basic Tools To Help With Collections

by Cherie M
(NJ)

I used to work in the real estate department of a large telecom company. I was responsible for collecting rent from the subtenants. Here are some of the tools I found useful.

First, a good credit analyst is worth their weight in gold. They should be able to weed out obvious credit risks by evaluating the potential clients financial statements, bank statements, trade reference, etc. They are a good way to stop a problem before they start.

Next, a good aging report is invaluable. You'll want to immediately be able to identify past due invoices and an aging report helps you with that. My experience was the sooner I started my collection efforts the more of a chance I had to collect on that invoice.

Finally, tenacity is very important. You have to keep after the customers to make sure they pay. However, it's also important to know when to bring in the big guns (aka the lawyers). Sometimes a letter from a lawyer is enough to motivate a slow payer to pay.

If not, it's at least the first step in severing that relationship. It always better to terminate your business with a bad payer sooner rather than later when that client as bilked you out of more money.