Dec

13

The eight principles of smart debt collection

by

The reports of a lately conducted survey show that 58% of our financial managers think debt collection can damage a customer relationship, and that unpaid customer invoices commonly lead to stress and even conflict in the workplace.

To avoid the negative effects of invoicing, handling of delayed payments and debt collection processes, there are eight principles to apply when drawing up effective routines. The graph below shows how Sweden, Norway and Finland stand in relation to these principles, and how they compare with each other.

Debt collection routines can be drawn up in a number of ways, and take different factors into account. Which of the following have you thought about in regard to collection and choice of debt collection service?  Basic: 468

Debt collection routines can be drawn up in a number of ways, and take different factors into account. Which of the following have you thought about in regard to collection and choice of debt collection service? Basic: 468

By applying the eight smart debt collection principles, companies can avoid unnecessary stress and administration, reduce conflict in the workplace, ensure a better experience for their customers and reduce credit risks.

How to create a smart debt collection process

Improve routines for invoicing, handling of delayed payments and debt collection through the following measures:

  1. Strive to keep the number of days between invoicing and payment to a minimum

OpusCapita provides a seamless process for invoicing and handling of delayed payments/debt collection without delays which has a positive impact on our customers’ cash flow. Continuity in handling of delayed payments and debt collection processes will ensure end consumers have a better understanding of the long-term effects of failing to pay.

  1. Apply invoicing and debt collection routines which take into account the customer’s payment history, for example

We draw up a payment history for our customers’ end consumers. We also factor in updates from credit reference agencies to ensure scoring is always carried out accurately, ensuring the most effective management of overdue receivables. At present, 51% of the companies surveyed do not have a routine for this purpose.

  1. Adopt systematic processes to avoid manual handling

53% of the companies surveyed do not have a systematic process for handling invoicing and delayed payments/debt collection. OpusCapita provides the latest systems for invoicing and debt collection management, fully automated to avoid the need for manual input. This saves time, streamlines processes and also allows agents to adopt a more qualitative approach to their work, as well as when dealing directly with end consumers.

  1. Draw up invoices and debt collection notices in terms of how the company wants to be perceived by its customers

The survey indicates that the majority of companies (55%) don’t think about how they are perceived, or the way they communicate through invoicing. It goes without saying that an invoice should clearly state what is being charged and how payment should be made, but this vital tool can be used for so much more, helping to build a brand or support sales activities by adopting a tone and design which dovetails with the company’s image and branding. While OpusCapita offers comprehensive solutions within document distribution, we can help by tailoring documentation to the unique needs of our customers.

  1. Consider how invoicing and reminders/debt collection notices are perceived by the company’s customers

The survey shows that as many of 62% of companies do not take into account how their invoicing and debt collection routines are perceived by their customers. Devising effective routines which project a positive image of the company should be top priority, however, for some reason, processes around issuing reminders and debt collection have fallen beyond the scope of regular agreements and often take time. In this case, interaction with the customer must take place in a formal and businesslike manner. For example, a customer with short term payment difficulties should be treated appropriately, in order to ensure it wants to stay with the company in future.

  1. Keep interest costs to a minimum

Cutting the timescale for invoicing and debt collection management helps to improve our customers’ cash flow, reducing interest costs.

  1. Apply different invoicing and delayed payment/debt collection routines for different types of customers.

OpusCapita adapts receivable management in line with different customer segments, reducing the risk of losing customers in critical segments.

  1. Use an accounts receivable ledger solution

OpusCapita has an accounts receivable ledger tool as part of its range of services, which streamlines and simplifies the process from invoice to payment.

Kredithanterarna OpusCapita helps companies to improve their processes across the board on a daily basis. To find out more about how we work, feel free to contact me.

Raine Westerholm, Operations Manager, Dept Collection at OpusCapita
raine.westerholm@opuscapita.com

Read more about the survey >>