Why Have A Formal / Written Credit & Collection Policy

• Clarifies who does what
• Facilitates training
• Supports actions
• Prevents unauthorized charges
  
• Promotes consistency
  
• Reduces wasted time
  
• Answers majority of the routine questions
  
• There are two basic concepts:
  
  • Time is the greatest deteriorating factor on the collectablity of an account
  • You will never have enough resources to collect all of your delinquencies
• Implement an early referral or cure program to maximize your internal and external recoveries
  
• Early referral programs, in addition to collecting, help you identify and single out no-pays from slow-pays and treat each accordingly
  
• Accounts 60 days or less of age are more than 80 percent collectable
  
• Accounts more than 90 days of age are typically less than 50 percent collectable (internally)
  
• Working accounts less than 60 days delinquent will typically maximize your internal yield and recovery. Use a third party for those more than 60 to 90 days delinquent and focus internal efforts on the easier, slow-pay accounts
  
• Develop and use a "60-Day Pursuit Program"
  
  • Concentrate all internal efforts into the time frame where they are most profitable
  • Start on your delinquents early — contact them often in the 60-day period
  • Become progressively stronger as the 60 days go by
• Elements to use in the "60-Day Pursuit Program":
  
  • Copies of statements and invoices
  • Previous letters
  • Information obtained from a sales visit
  • Information obtained from phone calls
  • Suspension of credit
• After 60 to 90 days, your options are:
  
  • Continue to pursue internally with reduced results
  • Write off the account
  • Use small claims court
  • Use an attorney
  • Use a full-service collection agency



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