Unfortunately , circumstances change and many good things eventually come to an end . Great customers can fall on bad times , and sometimes that is hard for an outsider to see when it has involved a gradual decline . Most distressed customers will continue to pay well , until they no longer can pay . senior managers . Most of the time , the situation ended with the amount being placed with a collection agency . In every case the placement occurred much later than it should have , ultimately reducing the amount eventually recovered . In some cases , nothing was recovered because of the delay . If a company executive is not the primary collector , there is nothing wrong with them giving it a try . Escalation is always good policy and I encourage that sort of upper management support , but there needs to be parameters around these efforts to prevent the type of hubris described above .
CREDIT MANAGEMENT
Avoidable Debt Collection Myths
By Wasilwa Miriongi
Cultural viewpoints about debt collection , are not necessarily set in stone . However , as in many areas of modern society , there are mistaken beliefs , myths if you will , that form a backdrop for various activities in which we engage . With all the world ’ s information at our fingertips , you may be compelled to think that creditors would have a good grasp of basic credit management information . Surprisingly , many people still do not understand some of the fundamental concepts of credit management . Or they continue to believe old , outdated or just plain incorrect information . While noting that trade debtor ’ s collections is no different let us take a look at some debt collection beliefs that might surprise you .
The customer has always been good for the money
There is a credit management saying the goes “ a good customer can easily turn bad if not monitored ”. Reason you would find out that , that was then , this is now . Unfortunately , circumstances change and many good things eventually come to an end . Great customers can fall on bad times , and sometimes that is hard for an outsider to see when it has involved a gradual decline . Most distressed customers will continue to pay well , until they no longer can pay .
Companies are constantly coming and going . It is rare for a family business to make it to a third generation , much less any limited liability company reach its centennial . So , when your favorite customer has a hiccup in their payments , you should take notice . Do not assume it is a onetime event any more than you would with a new , unproven customer . It is okay to trust what the customer tells you , until they break a promise to pay or otherwise mislead you . Whenever there is a red flag , you should review the customer ’ s credit status . Order an updated credit bureaus report . Re-check their supplier and bank references . Visit their place of business , especially if they are a key account . Vigilance and customer monitoring is the watchword .
I know the customer so I will be able to collect what they owe
You will commonly hear this being stated by Company ’ s Chief executive officers of
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Unfortunately , circumstances change and many good things eventually come to an end . Great customers can fall on bad times , and sometimes that is hard for an outsider to see when it has involved a gradual decline . Most distressed customers will continue to pay well , until they no longer can pay . senior managers . Most of the time , the situation ended with the amount being placed with a collection agency . In every case the placement occurred much later than it should have , ultimately reducing the amount eventually recovered . In some cases , nothing was recovered because of the delay . If a company executive is not the primary collector , there is nothing wrong with them giving it a try . Escalation is always good policy and I encourage that sort of upper management support , but there needs to be parameters around these efforts to prevent the type of hubris described above .
When an executive steps in to handle a customer with whom they have a relationship , it needs to be done quickly and if those efforts do not produce tangible results within a few weeks , a month at the most , additional action needs to be taken . Usually , any such collection efforts by an executive are a last resort , so the next step typically involves bringing in a collection agency or attorney , which can be a tough decision when there is a past relationship . Unfortunately , customers you know and like can still morph into debtors , and when that happens it may take tough actions to recover your money .
Collectors spend most of their time asking for payments
While it is true collectors are constantly requesting payment of past due balances , once that request is made they end up spending most of their time resolving disputes and invoice discrepancies . A large percentage of past due invoices are caused by up-stream problems in the order-to-cash process . Because collectors are charged with the collection of past due receivables , they end up having to clean up the problems
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