How can a company pursue debt collection proactively?
Here’s the truth: pursuing debt collection early mitigates the non-payment risk. That’s because the longer you put off pursuing past due A/R, the less likelihood of collecting on the debt. It’s a simple exponential curve, which makes pursuing proactive debt recovery imperative for any business.
But what predictors are available that can make the pursuit of debt collection both more successful and profitable? How can making debt collection front and center in an enterprise change the bottom line? Can you even be proactive in your approach to debt collection?
Tips for Proactive Debt Collection
In some service fields, like healthcare, asking for money upfront is tricky. Patients, while having higher deductible insurance, may simply not have the $4,000 or higher their plan requires. Interestingly, most companies still extend credit, thinking this is important for even acquiring the business. But asking for a down payment sends an important message to a client, whether a patient or not, that this is a business partnership with a give and take required. While hospitals typically cannot turn away a patient that cannot pay, other businesses should be asking themselves if they even want a client that cannot meet their terms from day one?
Getting payment faster means using predictive analytics.
Debt collection is like a cold call in the sales department – no one wants to make them. If you notice a cash flow issue creeping onto the books, it’s very likely that the culprit could be days in A/R. Smaller companies may not even have a dedicated debt collection department. Larger companies may simply be overwhelmed or don’t have the right tools in place to effectively conduct debt collection.
No matter the size of the company, businesses should have a strict credit policy. Learning how to walk away from a customer when there are payment red flags is crucial to lessening later headaches. But how will businesses even predict these signs? Are there tools out there that use business analytics to determine the likelihood of debt repayment?
Using TSI’s Predictive Analytics for Lower Days in A/R
The best way to conduct proactive debt collection is through the use of modern technologies. Data analytics and business information (BI) systems now harness the power of machine learning to cull client data from past financial activity and make some educated guesses on who will be more likely to pay back debt.
Not all debt collection firms have invested in these smart tools, but TSI has been an earlier adopter of technologies that improve debt collection processes – and your bottom line. While traditional debt collection is not rocket science, following a standardized series of letters, calls, and emails, business analytics and big data is in fact science. Applying computer algorithms to determine which clients are more likely to pay means TSI achieves a higher level of industry success faster than anyone else.
Identifying which clients will have a higher probability of payment and then creating workflows with those learnings means TSI works smarter for your company.
