What are effective internal collection efforts?

If you don’t have a factor to help collect your money for you, at times it can seem cumbersome to maintain good cash flow.  Collecting receivables within your company is one of the most important steps in keeping the money flowing.  Here are some ideas to keep your business on track.

Start with a written internal collection policy. This policy includes specify action steps that address:

  • Flagging past due accounts that need attention based on days past due or lack of communication or response from the debtor.
  • Communicating with flagged accounts via the phone, email, fax or mail.
  • Determining how many communications are sent before escalating the flagged account to possible write off or forwarding to a third party collection firm.
  • Once a flagged account has been escalated to a write off or forward to third party collection firm a final decision should occur quickly because time is of the essence when it comes to collecting past due commercial accounts in today’s economic environment because businesses are here today and gone tomorrow.     

 One final point about internal collections has to do with who actually does the internal collections. Often times companies default collection work to an account executive or to administrative personnel. However, successful collection activity requires specialized skill sets so creditors need to make sure that the people actually doing the collection work are skilled in proper collection know-how and collection techniques rather than just delegating the task to someone who simply has some free time.