Enacting a strict new collection policy helps sales reps' efforts to settle accounts closer to the 30-day mark than the 60-day mark. It's important to inform customers that payment is expected in 30 days while keeping in mind the 45-day mark as a guide for keeping or firing customers.
Timely payers should receive rewards such as early-pay discounts. Incentives may not sufficiently reduce payment lags, however. A commitment to strictness is important, and so is re-evaluating collection policies.
To re-evaluate your credit policy, take three steps. First, check credit histories on existing and potential customers. Second, evaluate your invoicing system. Third, investigate disputes. Some customers create disputes to buy time or forego payment.
With the proper collection system in place, adopt a three-stage collection procedure. If payment lags are partially due to your own policies, allow more leeway at first, but note how the customer reacts to your new standards in deciding whether to keep the account. At 45 days past due, use leverage tools; this includes offering to forgive the interest if the principal is paid in full by the agreed-upon date. At 45 to 60 days past due, focus on collecting as a collection agency would. Discard the original terms of the agreement and accept nothing less than 10% of the balance in weekly installments. At more than 60 days past due, if the customer doesn't agree to weekly payments or meet the new terms, turn the account over to a collection agency or collection attorney.
The article also includes a list of ways sales reps can minimize lost revenue and avoid potential legal problems by conducting themselves in a certain way over the phone.