When your customers owe money, you send an invoice and expect to receive a check in return. However, history tells us that you won’t hear anything but crickets chirping from some customers. About one in every 20 Americans has defaulted on some type of non-mortgage credit. You don’t have to resign yourself to writing off bad debt, though. You might just need a better strategy.
Shift Your Mindset
Your current strategy doesn’t work, so why keep using it?
Effective debt collection starts with a paradigm shift. Instead of thinking about unpaid accounts in terms of “collections” and “bad debt,” start thinking about your entire accounts receivable cycle. Just as preventive medicine can keep patients from getting sick, a holistic approach to finance can improve cash flow and help you predict future obstacles.
That’s why we use analytics to score our customers’ accounts receivables and to help them avoid unnecessary risks. If you have an effective accounts receivable management strategy in play, you won’t have to face collections as often.
Does this mean that you’ll never have to send an overdue payment notice? Probably not. However, you won’t have to worry about bad debt crippling your business because you’ll make smart, holistic financial decisions for your business.
Change Your Approach
Fear and panic won’t help your customers pay their bills faster.
Research shows that financial troubles can cause depression, anxiety, and other mood disorders in consumers. Some people use unhealthy coping mechanisms to handle stress, often denying that a problem exists. In other words, your overdue payment notice gets shredded with the other collection letters. The customer just can’t face the problem.
A compassionate debt collection strategy might help you collect cash faster. Instead of intimidating, threatening, or berating your customers, show them that you understand their predicaments and that you’re willing to work with them.
We’ve discovered that customers pay faster and more reliably with our empathetic approach to collections. We start with gentle reminders and continue collections even when accounts move from unpaid to dormant.
Work With Accurate Data
A customer moves and doesn’t give a forwarding address. Now what do you do?
When you don’t have accurate information for your customers, you can’t collect their debts. Account scrubbing technology proves invaluable when you need to correct errors in your master files so you don’t waste time and effort on bad information.
We have a database that contains more than 450 million records. We use that database to update your information so that collection practices can continue without obstacles.
If you’re struggling to collect bad debts, you might need a change of strategy — or you might need an experienced partner. We’re experts in the accounts receivable management field, and we help our customers remain financially solvent every day. Learn more about how to optimize your revenue, then get in touch. We’re excited to help you turn ineffective collection strategies into cash.
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