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While there are usually established trade practices in every industry, it is sometimes the differences that make customers choose one supplier over another. So it is important that your accounts know what your credit policy is, to eliminate misunderstandings. Reiteration of that policy, if payment is overdue, is a first step in facilitating payment. Never be embarrassed to ask for payment when it is justly due.

Undoubtedly, at the start of each business relationship, you built credit files on your customers. No company should extend credit without ascertaining reliability. In the event, however, that records have shown an account’s payments to be irregular, it is advisable to keep that account under close scrutiny, with immediate follow up warranted should payment be unusually slow. If the customer is a valued one of long standing, he demands extra consideration.

The affairs of companies usually don’t remain static: changing conditions in markets and management directions can abruptly alter the course of a company’s health & conduct. So it’s wise to keep abreast of trade reports pertaining to specific companies so that you are not taken unawares by a potentially calamitous credit situation.

If business conditions are uncertain, it is time to review your collection procedures and tighten them up. You can’t guard against unforeseen events, but you are minimizing your company’s chance of loss by rigid adherence to your policies. Start by revising your collection letters, making them terse, strong and more action-compelling.

Screen requests for extended payment terms carefully and try to get your sales department to discourage these requests, so that they can be held to a reasonable minimum. Too many cannot only endanger your company’s cash flow position, but lead to undesirable precedents in account relationships as well.

Generally, accounts figure that by making partial payments they will "get the heat off them". While such payments do show good faith, and part is better than none, they should not slow your efforts to collect the complete amount due. The best practice is to acknowledge partial payments promptly, and follow up with communication to accelerate payment of the remainder.

Shorten your collection schedule

Cut the time lag after an account’s due date by shortening the period from that date for continued extension of credit privileges. This "shock treatment" transmitted to a principal can sometimes exert needed leverage on accounts, particularly those who rely heavily on the supplies or services your company provides.

While you’re talking, there’s still hope. But make sure you are getting through to the right person at your account - the decision maker. Try phoning this person, offer to visit the account to discuss the balance due and establish a payment schedule.

Try to resolve disputed matters quickly

If the basis of non-payment is a dispute over quality of merchandise or service, price or delivery, a mutually- agreeable settlement should be arrived at promptly. The customer may use a minor dispute to withhold a substantial payment. Insist that the undisputed portion be paid immediately, indicating that the balance will be negotiated.

What to do when all else has failed

Your judgment will tell you when you’ve exhausted all the means at your disposal to negotiate a satisfactory payment, while maintaining the account as a customer. At this point, you can take positive action by referring the account to a professional collector, one who is a Commercial Collection Agency Section member.

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1. When indebtedness is 90 to 120 days delinquent.

2. When inquiry discloses customer financial reverses, falling sales or other creditor collection action.

3. When costs of your own personnel’s efforts do not justify further time investment.

4. When customer demonstrates bad faith and loses credibility.

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