Collection level 1
Despite a first contact with your client, he has not honored its promise to pay your bills which remain unpaid while they are overdue. The first step is to understand what is the reason for nonpayment and to dissociate the minor reasons:
|which will be resolved quickly and more serious reasons that are due to a dispute on an invoice, financial fragility of your client and / or his unwillingness to pay you.
If a collection action made by phone is essential at this stage, a letter with acknowledgment of receipt is promptly sent in order to request an immediate payment.
The objective of this new recovery action is to get a new promise to pay or a promise to pay in writing if the settlement is made in a few days.
Collection level 1
The effectiveness of your recovery process depends on a judicious combination of phone calls and dunning letters which at least one is sent with acknowledgment of receipt.
Objection often heard from the sales manager: "do not send dunning letters" or "do not call the client about overdue invoices because it will hurt our business relationship."
This is not true!
Request clients to respect their commitments does not affect the business relationship.
On the contrary, excessive tolerance in bill collection quickly brings to an intolerable situation (increasing overdues which affect the cash flow of your business) which finally will impact negatively the relationship with your customer.
Collect invoices with administrations and large companiesKey factor in the success of your recovery actions, finding the right person in the company is not always so easy. Indeed, if the accounting manager or the chief financial officer are easily identifiable as interlocutors targets in small and medium companies, this search can become more complex with larger-sized companies.
A major problem of debt recovery with large companies and administrations is to understand their organization and find someone who can unlock the payment. It is therefore necessary to investigate in order to understand the validation process of invoices and act where the blockage is, otherwise reminders will have no effect.
This principle is even more true as large companies and administrations are streamlining their accounting services with more automated tasks. This works as long as there is no problem. However, dispute and exceptions management is often poor, which implies specific recovery actions by the seller.
Next: collection level 2
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