Many companies measure their credit department's performance using
a limited number of tools or techniques. One of the most popular ways
to evaluate the department's effectiveness at controlling delinquency
is by measuring changes in DSO. If DSO is increasing and you are asked/instructed
to reduce it as soon as possible, consider these ideas to get "the
biggest bang for the buck"...
Prioritize. Work on the largest past due amount first - regardless
of how far past due they are [including amounts that are only a day
or two past due]
Work the balances 1 to 30 days past due as quickly as possible
since they should be the easiest to collect.
Make calls early in the day in the hope that you will either connect
with the customer or will get a call back the same day.
Limit the amount of time you work on deduction, not because deduction
management is not important, but because resolving deductions is
labor intensive and in the time that it might take you to resolve
one deduction you might clear a dozen past due invoices.
Try to speak with decision makers only, and don't hesitate to move
up channels if you do not make progress.
Plan out collection calls. Know how much is past due, the minimum
amount you will accept as a payment commitment, the customer's
prior payment history, and their willingness to keep the payment
they do make.
Be sure that every collection call includes a "pitch" to
the customer to get them to flag your account for more prompt payment.
At a minimum, your expectation should be to get the customer to pay
invoices faster than they are doing when you called.
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