Commercial Debt Recovery
Businesses rely on collections from their customers to fund their inventory acquisitions, employee payroll, business expansion, and a whole host of other factors associated with their business model. Finding ways to improve on their commercial debt collection processes can lead to better overall cash flow and improve on the collection process.
Designated Specific Individuals with Collection Duties
One way that companies improve on their collection processes are by designated individuals within their company with both implementing controls over accepting new customers, as well as having individuals tasked with the collection process over receivables. By having designated individuals associated with the process of collecting firm guidelines for accepting new customers and collection processes are more closely adhered to.
Using Third Parties to Improve on Commercial Collection Processes
Third parties can sometimes be used to put pressure on customers to pay outstanding debts. Some companies will utilize collection companies who will contact customers and potentially threaten legal action for late receivables. Others will go directly to lawyers for the purpose of collecting on outstanding receivables. Alternatively, some companies will transfer the collection risk to a factor who will collect the receivable for the business in exchange for a percentage of the receivable If the receivable is not collected, the factor will assume the collection risk associated with the receivable which allows the company to have a more reliable stream of revenue.
Monitoring Your Receivables and Knowing When to Escalate and Cut off Customers
A designated person who is familiar with company policy should be constantly monitoring outstanding receivables and should have firm guidance on when to cut off existing customers who don’t pay outstanding balances or require prepayment before a sale goes into place. Ultimately, a company should learn about collection trends and analyze them to find ways to improve on their collection process overall. For more details click on Commercial Debt Recovery.