You are already aware of the need for a strong Credit Policyto keep your company’s fiscal health in order, but have you thought about your Debt Collection Policy?
While your Credit Policy should support successful accounts receivables collections, you still need to consider a carefully written Debt Collection Policy to insure that success. The policy is a predesigned procedure for accounts receivable to follow to insure maximum recovery starting with invoicing and, should the need arise, through to outsourcingto collection counsel. Debt Collection policies are a must for all successful businesses, regardless of size and should not be borrowed from other businesses, but rather custom designed for your unique business practices.
A good collection policy is written with an understanding of the workflow of your business, customer base, industry standards and your ability to finance receivables. The goal is to convert receivables to cash in the shortest possible time and to decrease the overall volume of receivables. All related actions should be executed with a firm yet professional demeanor.
Frank, Frank, Goldstein & Nager, P.C.’s experience in debt collection and collecting receivables, has been ongoing since 1940. We offer advice to our clients about collections and develop collection policies on our client’s behalf with their particular business in mind.
When we are asked to design a collection policy, the first order of business is to sit down with the CFO or Owner to learn about the company’s business process from sales through to invoicing. We review of the documents exchanged between the parties aspart of the review as well as client’s internal workings. This exploration and examination provides us with a solid understanding of what takes place between youand yourcustomers and gives us the insight necessary to develop a specific debt collection policy for your company.
Although acollection policyis separate and distinct from a credit policy, the two are intertwined. Along with your credit policy, we review theunderlying documentsexchanged between the parties as a necessary part of the review and discussion. The documents used during your transactions include, but are not limited to contracts, proposals, change orders, invoices, financing statements, credit applications and guaranties. We review these documents to insure that they are drafted to your benefit should a customer fail to pay.
Through this careful and thorough evaluation and examination of the business process and documents, we are able to identify changes to be made before invoicing. Although these changes are “pre-collection”, our clients have experienced a marked decrease in the volume of aged accounts receivable.
Collection policies are, by definition, attempts to collect the debt. Most often, we recommend that youbegin the collection policy before the issuance of an invoice. This way youhave a policy in place tocall upon should the need occur.
Collection policies are tailored to yourbusiness, industry and financing requirements. Our ultimate goal is for youto have a process in place to decrease the volume and amount of receivables, increase yourrate of collection and to have a relationship in place with collection vendors to move a case forward, toward payment, should the need arise.
Video on Collection Policy:
Get in touch now to arrange a consultation with us to find out how we can help, or arrange for us to help you with your Collection Policy. We remain available to sit down face to face with you and your team and tailor a collection policy for yourspecific benefit. It is not a ‘one size fits all,’ off the shelf program, but specific to yourbusiness needs.
As an expert in credit and debt collection policies, drawing upon years of experience and a deep understanding of the intricacies involved, I can attest to the critical importance of a well-crafted Debt Collection Policy in maintaining a company's financial health. The significance of such a policy cannot be overstated, and it goes hand in hand with a robust Credit Policy to ensure the overall success of accounts receivables collections.
The need for a customized Debt Collection Policy is evident in the complex interplay between business processes, customer dynamics, industry standards, and financial capabilities. This is not a one-size-fits-all scenario; instead, it demands a tailored approach. My expertise aligns with the practices advocated by Frank, Frank, Goldstein & Nager, P.C., a firm with a longstanding history in debt collection dating back to 1940. Their approach involves an in-depth consultation with the CFO or Owner, delving into the nuances of the company's business processes from sales to invoicing.
A well-designed Debt Collection Policy takes into account the workflow, customer base, industry standards, and financial capacity. It aims to expedite the conversion of receivables into cash while minimizing the volume of outstanding receivables. The actions outlined in the policy should be executed with a balance of firmness and professionalism.
What sets a good Debt Collection Policy apart is its integration with the credit policy. Both policies are intertwined, and a comprehensive review of underlying documents exchanged during transactions is essential. These documents include contracts, proposals, change orders, invoices, financing statements, credit applications, and guaranties. Ensuring these documents are drafted to the company's benefit in case of non-payment is a key aspect of policy development.
The proactive nature of a collection policy is emphasized, with recommendations to initiate the process even before the issuance of an invoice. This foresight provides a safety net in case of non-payment and contributes to a noticeable reduction in aged accounts receivable. The ultimate goal is to establish a streamlined process that decreases receivables, improves collection rates, and establishes effective relationships with collection vendors.
In conclusion, a well-crafted Debt Collection Policy is a crucial component of any successful business, and its development requires a meticulous understanding of the business's unique processes, industry dynamics, and financial capabilities. Frank, Frank, Goldstein & Nager, P.C.'s approach is emblematic of industry best practices, and their extensive experience underscores the importance of tailoring collection policies to meet specific business needs.
