I can’t think of a time when people have been as ready for a new year as they were at the end of 2021. Sure, people make resolutions and promise a “new year, new me” every year, but there is something different about this particular transition. Even now, a few days into 2021, people are showing a change in perspective and a new tenacity toward reaching their goals. A new year is a great opportunity to make some changes in your business, as well. For individuals, a new year often doesn’t mean much more than the change of a page in the calendar. But for your business, a new year means a new fiscal year, a new quarter, and a chance to make changes that will benefit you all year round. Here are some tips for making 2021 your most profitable and painless on the collection side of things.
Avoid Unpaid Debt to Start With
One of the best ways to set yourself up for collection success is to not let unpaid invoices happen to begin with. This starts with your sales team. Review your policies for extending credit or long term payment terms. Ask yourself if the risks you are taking are worth it down the road. Are you vetting potential clients as thoroughly as you should? Look at you unpaid invoices and look for any patterns. Are there certain income levels, business types, or credit scores that are leading to more unpaid balances than others? What about certain products or services that yield more unpaid invoices than others? Once you notice these patterns, you can make adjustments to your policies to reduce unpaid invoices in the future.
Consider a Shorter Billing Cycle
Some businesses have payment terms of up to 90 days or longer. Then, after those 90 days, some businesses will continue to send a monthly statement for the amount with a small fee, maybe 5%, in perpetuity until the bill is paid, if it ever is. Does that sound like you? If so, consider reducing your net payment terms to 60 or even 30 days. For retail customers, there is no reason to not pay upon receipt of the product or service. For business clients, 30 days is more than reasonable for payment terms. Research shows that debts are much less likely to be paid after 90 days with collection attempts during that time. Don’t let the entire 90 days pass with no intervention.
Don’t Wait to Send Accounts to A Collection Professional
One of the number one reasons debts become uncollectible is that the time runs out to collect them. As we mentioned above, debts become more difficult to collect after 90 days. When some businesses are unsuccessful in collecting these debts in house, they often shelve them for months or even years. When this happens, the statute of limitations may expire, making it illegal to take certain collection actions down the road.
If you haven’t already, we recommend you find a reliable, professional collection agency to partner with for your collection needs. We would love to help you with this at Southwest Recovery Services. We’re a contingency collection agency, so we don’t charge you any fees until we collect. We are also customer service professionals who pride ourselves on being an extension of your team. We will always treat your customers with respect and kindness.
Once you start working with us, we recommend that you send any overdue invoices for collection as soon as possible after the due date. The sooner we can make contact on the account on your behalf, the more likely you are to get paid, and get paid more quickly.
Call Southwest Recovery Services today!
We would love to be your collection agency of choice. In addition to our contingency collection model and our respectful approach to collections, you will find that we are experienced and dedicated to getting your invoices cleared. We have many tools at our disposal to help you collect on your clients’ debts and the expertise to know how to navigate the legal process. We can get started on your portfolio right away. Give us a call today for more information.