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Commercial Collections Billing Practices Advice

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Swiftness is the key to collecting past due commercial accounts because commercial accounts depreciate more faster than consumer accounts.

In creating and implementing a billing system, a credit grantor should recognize that time is the safest refuge of any debtor. The more time they are given, the less likely they are to pay. Hence, sales documents should be explicit about payment terms, return privileges, interest charges on overdue accounts, guarantee and service costs.

Various Commercial Collection Programs Used

A series of letters used together with an account aging sheet or data printout will help to track slow-paying accounts.

All systems should have an organized and mechanical follow-up of accounts at regular intervals, for instance, 30, 60 and 90 days past due.

It is essential to establish regular billing and commercial collections procedures. Follow up on every account to the point where contact—or lack of contact—with the customer indicates some alternative action should be taken.

Help Commercial Collections From The Beginning

Built-in commercial collections controls at the time of sale often assist in receivables recovery and help avoid delinquencies. These include such items as sales contracts or a well-defined vendor’s purchase order with conditions of sale clearly spelled out. Appropriate terms should be printed on sales documents (contracts, invoices, statements) clearly and without fail. Such terms will include notice of interest charged on overdue accounts and discounts granted for prompt payment.

Internal control of receivables should include an aging which permits periodic evaluation. This should fit together with commercial collections routines. The time for referral to a professional commercial collection agency should come from the aging at 60 or 90 days past due, and sometimes sooner.

After a first statement has gone unheeded, start your commercial collection procedure. Any program that permits three statements—or a two to three month time lag—before the first collection step is taken will result in a lower recovery ratio.

Any procedures for handling slow-paying accounts should emphasize speed in contacting the delinquent bill payer. A company with a past-due account on your books is probably in the same condition with a number of other suppliers. The debtor may be on the verge of serious financial trouble, and the creditor who moves first is most likely to recover their money.

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