Squeaky Wheels Do Make a Difference With Debt Collection -- If You Do It Right

Needless to say we live in a markedly different world since COVID19 hit the United States shores Before that time the country was experiencing the longest economic expansion on record Debt collection took a major shift during the pandemic In many companies it was halted or it slowed down considerably The flood of government aid along with the sudden contraction in spending led to an unpredictable economy Industry experts expect that it will take years to understand the impact of this debt collection haltThere39s no one rule of thumb concerning how long a creditor should wait to press clients for payments now The answer to that question could vary depending upon who you ask within your companyThe sales team which is the backbone of the media industry usually views collections as a problematic situation Sales will agree that a valuable service was supplied to the debtor and payment is expected But to avoid upsetting a debtor and risk the loss of future business they would rather postpone collection action as long as possible Landing a customer takes time and money Losing one to a late payment is a danger but hopefully avoidableIdeally collections departments would like to receive payment in accordance with their companies39 terms Realistically we know that this isn39t always going to happenCredit risk is significantly increased once invoices age more than 60 days past due Time is the most important factor when collecting debt The sooner the collection process starts the better the odds are you39ll be paid the full amount owed After just a few months of nonpayment you39ll collect only about 73 cents on the dollar on average according to debt collection statistics Go unpaid for six months and chances are you39ll only collect half of the original debtSo what should collections departments do Communication with the sales manager SM and the account executive AE managing the debtor39s account becomes crucial when the debt is over 60 days past due Understanding a debtor39s reason for nonpayment is key Don39t allow receivables to get too old before having a discussion with the AE and SM as they are key to acquiring accurate information about the status of the account and repayment options In particular the AE is the collection team39s ears and eyes on the debtor39s businessGive them the opportunity to reach out to the debtor Ask for feedback once they have Making frequent contact makes the debtor aware you39re on top of collection effort and they are more likely to pay If you let a debtor know you value their business and are willing to help them through a rough patch it is a sure way to create a valuable customer for many more years to comeAlso bear in mind that almost 30 of customers use delayed payments as a form of financing This should concern all of us because of the ripple effect delinquent payments have on the creditor It can be summed up in a very simple equationReceivable Time Exponential CostAccording to a report published by Fidesic Corp the cost of managing receivables comes to around 844 per invoice Approximately 90 of that cost is labor related The higher your days sales outstanding DSO the more administration costs increaseBusiness revenue is calculated months in advance based on projections That expected future cash flow is often allocated to other departments to help your company grow Unpaid pastdue invoices not only affect cash flow they also affect the entire way a business operatesWhen a debtor is having problems paying their expenses they often prioritize which ones are the most important to pay first and will delay payment to the rest If they know your company is not aggressive in following up on late payments they will not put you on the priority listClients form latepayment and nonpayment habits So counteracting that tendency by attempting to collect outstanding debt should become a goal for all of usThis story was written by J Dee Stevenson the Corporate Credit and Collections Manager at Gray Media Group She can be reached at deestevensongraytvClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillagecomMyersBizNet

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Squeaky Wheels Do Make a Difference With Debt Collection -- If You Do It Right

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Squeaky Wheels Do Make a Difference With Debt Collection -- If You Do It Right

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