It’s staggering to think that a mere one-third of businesses have a debt recovery policy in place. If they don’t create a recovery process, their customers will.
For a business, collecting money can present major obstacles. The magnitude, persistence and complexity of the problem prevents businesses, large and small, profit or non-profit, from achieving their full potential. In this economy, it is incredibly important to create a model for your company that works for you.
So why haven’t they formulated one? One reason is a fear of being stuck with rigid and inflexible policies that may be inappropriate for special situations. Remember, the only thing constant in life is change. You can be flexible.
The right recovery policy for your company:
- Allows you to walk away from business that is an unnecessary credit risk;
- Does not have to be rigid or inflexible;
- Should be reviewed & updated as your business expands;
- Is a document that all your customers sign indicating that they have accepted it;
- Contains an internal policy in writing for your personnel
How one goes about building this policy is entirely up to them. However, a credit policy that remains stagnant and exists solely in an electronic file is useless. A credit policy should be a living document, in writing, reviewed and updated as a business expands
Not only should each customer receive a copy, then sign that they have read, understand and accept it on an annual basis, all of your sales, finance and credit employees should do the same.
Changing to a workable credit policy is best done all at once, rather than a little at a time. This will avoid confusion and unnecessary stress for both you and your customers. Generally, people are most cooperative if they know in advance the rules for doing business with you.
To counter the general fear of upsetting clients and potentially losing business, send a copy of your new policy to all established customers with a cover letter explaining that you have changed your policy on the recommendation of your CPA and want to make sure that all of your customers are aware of it. Discuss the change and be prepared to let them pay you one more time the old way if necessary.
Have you formulated a debt recovery policy for your company?
Please visit Dynamic Legal Recovery’s website or call us at 877-777-7564 for your complimentary evaluation.