How much are your customers costing you? The value in proactive collections management!

How often do we hear of a customer who delays until the last possible moment before making payment to a creditor? An invoice is sent with payment terms of 7 days, and the customers account is logged for follow up action. A statement for the month is sent to the customer with the outstanding amount in a 30 day bracket. Perhaps they receive a follow up phone call, but with no payment received the overdue amount moves into the 60 days bracket, accompanied by a more strongly worded letter. More time passes, and once the account is 90 days overdue and debt recovery action is threatened, the overdue amount is finally paid. If no permanent note is attached to the customers file or credit history, then they are free to repeat this action over and over again.

However, the days of customers continually revolving through the credit management process are drawing to a close. Many companies nowdays are looking for more intelligent methods of managing their customer base, and the terms of credit extended to them. A substantial challenge being presented to customer orientated organisations is being able to interact with the customer on an individual basis, extending the sort of treatment and customer service that reflects the value of the customer to the organisation. Particularly where collection of overdue accounts is concerned, it is fundamentally important that the customer is treated in a manner that fits with their past history. This can be as simple as ensuring that tier 1 customers receive a different or more personalised communication than a standard customer might, right through to the implementation of automated systems that determine the most appropriate collections strategy on a per customer basis. What ever the complexity of an organisations collections management strategy, the primary goals are still to ensure the collection of outstanding amounts in the shortest possible timeframe, via the most cost effective channel, whilst maintaining or enhancing the existing relationship with the customer.