Past-due accounts present a number of problems, one of which is how to collect them. When faced with this uncomfortable issue, avoid using these collection strategies. They might not produce your desired result -- getting paid in full.
- Late payment charges: Late payment charges are often ignored, they don't speed up collections, and they can be hard to enforce.
- Early payment discounts: If early payment discounts are offered (such as 2% off for payment in 10 days), some customers take the discount and still pay in 30 to 60 days.
- Collection agencies: Collection agencies should be considered a last resort. They take a big percentage and often alienate customers.
- Going to court: Taking a deadbeat to court may result in a countersuit that costs much more to resolve than the delinquent bill.
- Credit reports: Even the most reliable credit reports can be misinterpreted, resulting in doing business with bad credit risks or avoiding doing business with potentially good customers.
This material was adapted from Chapter 13 of Financial Troubleshooting by David H. Bangs Jr. and Michael Pellecchia.
Copyright 1999 Goldhirsh Group Inc.