When you buy a pair of shoes at the store, you hand your cash or credit card to the cashier, then he or she hands you the shoes. The transaction takes place fluidly and almost simultaneously, which means that the retailer gets the cash and you get the merchandise.
But as we know, that’s not always how business works. When you extend credit to your clients or customers, you run the risk of failing to collect monies owed in a timely manner. As your days sales outstanding (DSO) average increases, your cash flow can slow to a trickle or even come to a screeching halt. That’s the bad news.
The good news? There are several ways to maximize your debt recovery — and fast.
- Shorten Net D Trade Credit
Start with something that’s well within your control. When you extend credit, shorten the Net D time in your contract. Different industries have varying standards for trade credit, but if you currently offer credit on a Net 90 basis, you might shorten it to Net 60 or Net 30.
The reason behind this strategy lies in urgency. If your client knows that you expect your money faster, you have a better chance of collecting. You’re less forgettable when your invoice lands on your client’s desk just 30 days before payment is due.
- Employ Consistent Messaging
Keep those outbound messages consistent, whether electronically or on paper.
When communicating with clients about credit-related issues, make sure that your messages remain consistent. If your messaging changes, your client might get the idea that you’re disorganized or in no hurry to collect the cash you’re owed.
Each time you communicate with a delinquent client, remind the client of your specific policies, procedures, and expectations. Always refer to the contract they signed with you as well as any previous communication. Keeping a paper trail helps you establish your case for prompt payment.
- Use Results-Oriented AR Software
If you don’t have an in-house AR software program, you might want to consider investing in one. It can organize your accounts receivable much faster than a spreadsheet or other generic tool, and can help you automate redundant and repetitive tasks that keep your staff away from decision-oriented tasks. You might notice an increase in billing accuracy, a reduction in days sales outstanding (DSO), and faster ledger clearances, as well.
- Outsource Your Debt Recovery Needs
This option can often help your business save money because you don’t have to hire extra personnel, invest in expensive software, or train your staff in debt collection and all of the rules and regulations that comes along with it. The agency handles everything, from first- to third-party communications and more.
Rocket Receivables uses a two-stage process that helps small and mid-sized businesses collect debts based on their specific budgets and needs. During Stage One: Fixed-Fee Collections, we offer fixed-fee collections that include a friendly reminder letter in your name as well as third-party letters that increase the sense of urgency for payment. For harder to collect accounts, we can move forward to Stage Two: Contingency Collections, which we perform on contingency. In other words, if we’re not successful, you don’t pay.
Regardless of your industry, it’s time to get better, faster results with your debt recovery efforts. If you’re interested in partnering with an industry-leading debt collection agency, buy now and learn why Rocket Receivables is the ideal choice for your business.