Collecting overdue debt: it's your money so don't be afraid to ask for it

No matter how carefully you choose your credit customers, late payments will sometimes be an issue. How will you collect them? Your first consideration is to ensure you have a system in place to alert you to aging receivables.

Then, before you take action, investigate your customer's situation. There may be circumstances that caused the delay in payment. If that isn't the case, there are four suggested steps to follow.

And remember - always address your communication to the right person - the person with the authority to pay!

1. A reminder (perhaps at five days to a week late)

Assume at this point that the bill has somehow been overlooked.
'Your payment of $1000 has not yet been received. Please check on it promptly. Thank you.'

2. Engage in a conversation (15-21 days overdue)

Assume the customer knows of the bill, but won't or can't pay.

'Your payment of $1000 is overdue. Is there a problem where we may help? As you know, we cannot provide further product until the overdue amount has been submitted. When can we expect your payment?'

3. A demand (45 days past due)

Assume the customer can't or won't pay because of a serious problem.

'Your account is overdue. You have not responded to our earlier requests. This is our final reminder. If payment is not received in 7 days, we regret that further action will be taken.'

4. A final effort (60 days overdue)

Assume that you have lost this customer and want to recoup as much as you can. 'We have made several requests for payment without a response. We have referred your account to a collection agency.'

Connect with us to receive updates throughout the day:

Like us on Facebok Follow us on Twitter

Dun and Bradstreet AustraliaTop of page Dun & Bradstreet Australia Pty Ltd 2015 | D&B Small Business    *About Us    *Sitemap    *Advertise    *Privacy    *Terms & Conditions