| An effective collections policy requires some kind of | | | | Let's finalize this matter now. Please mail you |
| system that gives you the best chance of getting | | | | payment in full today. |
| overdue accounts get paid. Letting late payments | | | | 6. SECOND COLLECTION PHONE CALL, 39 DAYS |
| slide can slow your cash flow and spoil your | | | | AFTER ORIGINAL DUE DATE |
| company's chances of collecting. | | | | The claim is almost 40 days past due. Be polite yet |
| To keep your cash flowing smoothly, smart | | | | firm, and ask for full immediate payment. Work to |
| businesses use carefully scheduled letters and phone | | | | resolve excuses. Find out what the real problem is. If |
| contacts to convince clients to pay. These contacts | | | | the debtor cannot pay in full immediately try to get a |
| start out friendly and gradually become more serious | | | | partial payment today. Failing that, get him or her to |
| and insistent as payments become increasingly late. | | | | commit to a payment date. This date should be in no |
| How you structure your collections approach is your | | | | more than 2 weeks. |
| choice. The important thing is to have a tight system | | | | 7. SECOND COLLECTION LETTER, 49 DAYS AFTER |
| and to use on every account to it. The following | | | | ORIGINAL DUE DATE |
| outline will help start designing yours. | | | | Now you should be ramping up the tone and letting |
| 1. CLIENT APPROVAL PHONE CONTACT | | | | the debtor know that you consider this a serious |
| Approximately 3 days after your product or service | | | | delinquency. This letter should demand immediate |
| has been delivered make your first phone contact. | | | | payment, and discuss the short-term consequences |
| Dissatisfied clients are more likely to pay late. Head | | | | of failure to pay. Send this letter ? and any |
| off early issues by making a friendly phone contact. | | | | correspondence that follows ? via certified mail or |
| This will help you talk with your client about your | | | | overnight mail to give you a record that it was |
| company's performance to make sure you have met | | | | received. TRY THIS: |
| their expectations. Did the delivery of your goods or | | | | Our numerous attempts to resolve your long |
| service arrive on time, in the correct quantity, was | | | | overdue account have not been successful. If |
| there damage, is the pricing correct. End these calls | | | | payment is not received within 7 days, we will be |
| by mentioning that an invoice will be arriving shortly, | | | | forced to suspend your credit privileges with our |
| and underscore its due date. | | | | company. Please promptly contact us with an |
| 2. OVERDUE NOTICE, 5 DAYS PAST DUE | | | | explanation for nonpayment or a payment plan for |
| You are just giving them a friendly notice reminder | | | | your overdue account. |
| that the due date has passed. You give them the | | | | 8. THIRD COLLECTION PHONE CALL, 60 DAYS |
| benefit of the doubt and let them know that you are | | | | AFTER ORIGINAL DUE DATE |
| assuming that the client has forgotten, misplaced, or | | | | No is the time stress the seriousness of the situation. |
| lost the bill in the A/P department and will pay with | | | | This is the contact where you explain there no more |
| this reminder. You may want to mail or email a | | | | options available to payment in full. You are prepared |
| duplicate invoice with "past due" stamped on it in red | | | | to turn this account over to a collection agency and |
| ink. | | | | if necessary take further legal action. Be sure to let |
| 3. SECOND OVERDUE NOTICE, ADDITIONAL 10 | | | | them know the benefits of taking care of this issue |
| AFTER THE FIRST | | | | now, such as continuing good relations and their good |
| This should still be another easygoing reminder to the | | | | credit. Offer to pick up the payment by overnight |
| client that the account needs immediate attention. | | | | carrier or give them your bank information so they |
| This can be a short form letter or email with a | | | | can do a bank to bank wire. |
| duplicate invoice attached. Keep it friendly and | | | | 9. FINAL COLLECTION LETTER, 67 DAYS AFTER |
| non-threatening. TRY THIS: | | | | ORIGINAL DUE DATE |
| We are writing to remind you to make payment on | | | | You now are taking a demanding tone. State that if |
| your overdue balance, which may have been | | | | payment is not received by the agreed-upon date, |
| overlooked. Please remit a check for $ in the | | | | you will turn the account over to a collection agency. |
| enclosed envelope to bring your account up to date. | | | | TRY THIS: |
| Thank you for your cooperation. | | | | We have turned your account over to (name of |
| 4. FIRST COLLECTION PHONE CALL, 7 DAYS | | | | collection agency), our collection agency to collect |
| AFTER SECOND PAST DUE INVOICE | | | | your overdue balance of $ . There remains one final |
| Make a phone call to find out what is the reason for | | | | opportunity to resolve your account while avoiding |
| non-payment. The client may now be dissatisfied with | | | | needless additional costs and embarrassment. If we |
| your product or service, or may be experiencing cash | | | | receive your check for $ within the next 5 days (or |
| flow problems. Be polite but firm and make sure that | | | | reach an acceptable payment arrangement) then we |
| you get a commitment to pay. Expect excuses and | | | | will stop further collection action. |
| be prepared the handle them on this call. If the | | | | 10. TURN OVER TO COLLECTION AGENCY |
| debtor says the check is in the mail, ask when it was | | | | The account is now 70+ days in past due and may |
| mailed and to what address. | | | | require a professional collection approach. Your |
| 5. FIRST COLLECTION LETTER, 29 DAYS AFTER | | | | collection agency can send a ten day demand, a 48 |
| ORIGINAL DUE DATE | | | | hour fax demand, whatever you require. Receiving a |
| This letter should still be polite, but more probing and | | | | letter from a 3rd party collection agency often will |
| straight forward. Confirm in this letter what was | | | | prompt a debtor to pay. If you have not received a |
| promised in your previous contact in the call, and | | | | response to the last collection letter within five days |
| remind the debtor their promise to pay. TRY THIS: | | | | you should immediately place account with a |
| Per our previous conversation on (Date), you had | | | | professional and licensed agency. |
| indicated that you would send us your payment in full. | | | | |