Globally, 54% of businesses found debt payments too long. 46% were outspoken about their clients not paying on time.
Collecting payments is a tough job from debtors/customers, especially when the volume of payments is overwhelming and the ticket size is too large or it changes with the tide of the market. This often causes a disbalance between the inflow and outflow of capital or revenue, especially due to the status of some payments being ambiguous, or not coming through on time.
Tracking down such pending payments from customers is a challenge popular among companies with a post-paid service model. Businesses need a smart trick up their sleeve to get on top of this challenge. To help with debt collection and manage the entire process, here are some useful tips.
Take inventory of debt
Make a list of debtors who owe you money. Collect and centralise all the documents and invoices pertaining to the debtors, so you can sum up your total debt and how much of it has been paid to you. This step will aid you in identifying those debtors for whom invoices have not been raised.
Assess and categorise debts
Get an overview of all the documented debts and you’ll be able to make clear-cut decisions on the debts you need to collect swiftly. The debts can be categorised with colour codes. Green for debts that don’t need to be paid currently, yellow for debts approaching their due date fast, and red for debts that have surpassed the date of collection.
Start with the least imposing debt
Start with the debts that have been marked red and are quite easy to pay, owing to the debt delay. Debts with smaller ticket sizes and easy debtor approachability should also be pushed up the debt collection list. Sometimes a company can be heaped with small-ticket size debts in the hundreds. Proper organisation of such numerous outstanding payments and delegating them to debt recovery representatives through a robust software can significantly reduce the load.
Contact debt payers only when necessary
Keep a calm and professional attitude with a firm and persuasive voice whenever dealing with indebted customers. Calling a debtor repeatedly might annoy them, making them less likely to continue a business relationship with you.
In fact, there are only five cases when you should contact the customer:
- When they decide to become a customer from a lead
- When they place their first order
- Once the invoice has been sent
- A few days from debt due-date
- If debt has not been paid, a day after the due date
Attract debtors with an incentive for paying early
Apart from being flexible with different remittance methods, it’s better to also have strict payment terms on an e-invoicing platform. Adding incentives for early payments on such platforms will rouse the customers to pay on time, while the terms of business will keep them within the company compliance lanes. When you receive a payment before the due date, as incentive, you can give them discounts on payments, gift cards, extra services, and more.
Use an automated collection software
With an automated collection software like CredFlow, a company awaiting outstanding payments can plan for most of the debt-retrieval activities mentioned above on a single virtual platform, on a smartphone. CredFlow users can share invoices with debtors, send them auto-reminders via email and SMS, set up an incentive program for fast payments, and much more.
Proper training and knowledge can overcome most of the challenges faced during the administration of a business. These tips will help you ease the late debt payment troubles and fill the gaps in your debt documentations. We hope this blog was useful to you. Stay tuned for more informative blogs on this website!