How to Avoid Wasting Time with Past Due Accounts
A debtor in Fleet Street Prison THS
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Overdue accounts can be challenging to collect especially if the debtor is deliberately avoiding all your attempts of communication.  If the debtor does not pay within a reasonable amount of time, you can start thinking about writing it off as a bad debt or hiring a collection agency to do the collecting for you.  You already lost a lot of time trying to track the debtor on your own.  Months may have passed and still no money returned.  You may have wasted your time when you notice that the expense you incurred is almost the same as the amount owed to you.

 

Establish a Good Collection System

To avoid wasting any more of your precious time than you already have, it is time to move on and forget about the experience.  The best thing that you can do now is to establish a good collection system.  Having an efficient collection system should be treated as a process.  Collection is not just about writing a single letter without communication beforehand.  It is better to let your customers know your terms and conditions before allowing them credit.

 

Plan a Series of Steps

In designing your collection system, you will need to plan a series of steps to ensure a higher rate of return on all your accounts. Do not allow an account to exceed 60 days past-due.  If an account is nearing its due date, you can send a friendly reminder to the debtor.  This can be done through telephone, e-mail or a formal letter.  A past-due statement can be sent to the debtor when there is no response after your attempt to remind.  If the statement of account did not work, scheduled phone calls can be made.  Calling at the right time is the key if you wish to speak to the debtor.

 

Make an Effective Final Demand Letter

After making phone calls and still no response from the debtor, you can start drafting a final demand letter.  Set a time limit or a final deadline that you expect the debtor to pay.  Indicate the exact date and time of your time limit.  In the final letter, you should firmly state that you will seek legal action if the debtor will not pay on the specified date.

 

Consider a Payment Arrangement

If the debtor responds and offers to pay in instalments because of financial difficulty, you can set up a meeting to talk about the terms of payment.  It is better to accept a series of payments from a customer and keep him as a good customer in the future.  Cutting the customer off because you demand a full payment is not a good idea especially if this is the first instance of non-payment.

 

Chasing after past-due accounts is useless if they have exceeded your limit for receivables.  Always monitor your accounts receivable to avoid neglecting a past-due account.  It is also a good practice to establish a personal relationship with customers.  Open communication lines are important to avoid wasting time and effort.

 

 

The Cash Protection Agency are a debt collection agency and offer credit control services that allow businesses to collect money from their clients quickly and without damaging valuabel customer relationships. Give us a call on 0800 433 4113, we’d love to chat.

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