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Maximize your collections
This document provides guidance on effective credit management strategies. It outlines key steps like establishing clear credit policies, checking references for new customers, extending credit judiciously by setting limits, and following up promptly on past due accounts. The objectives of credit management are to minimize risks, eliminate bad debt, and collect money owed by being fair but also enforcing policies. When customers are late on payments, the document advises referring to the credit policy, making collection calls, and potentially revoking their credit if needed. Resources for free credit applications and information on debt collection laws are also referenced.
Maximize your collections
- 1. Maximize Your Collections Crucial Steps for Proactive Credit Management Presented by Michelle Dunn
- 2. What is CreditManagement? • Management of business credit, A/P & A/R • Policies & procedures regarding payments • A plan for revolving credit customers • Guidelines for collecting money • A Streamlined system for contacting customers • Avoiding bad debt
- 3. Objectives • Payment options • Setting credit limits • To eliminate bad debt • Collecting money • Dealing with past due customers
- 4. A Credit PolicyMust: • Be tough & flexible • Offer specific guidelines for action • Be enforced!
- 5. Credit & yourCustomers • Be fair, reasonable and follow the law • Protect yourself & your business • Always check all references
- 6. Extending Credit • Credit applications • Fill out & sign • Keep original & give customer a copy • Check all references • Determine & set a credit limit • Send customer deny or accept letter New Customer Packets 1. Credit application 2. Credit policy
- 7. Extending Credit • Make it Easy • Make it Quick • Make it Painless
- 8. Credit Risk ToMinimize your Credit Risk: – Get a personal guarantee – Offer month-to-month credit – Offer ship-to-ship credit – Get a security deposit – Get a 50% deposit on every order
- 9. When checking referencesask: • How long have you known the customer? • How long have they done business w/ you? • What payment method do they use? • Do they pay within terms, late or use discounts? • What is their average monthly orders? • How often do they order from you? • What is their balance due now? • Is any of that past due? How much past due? • What are your terms with them? • Do they make any returns?
- 10. When checking abank reference ask: • Is this a business, personal, savings or checking account? • When was the account opened? • What is their average daily balance? • Have they had any NSF or other returned checks? • Do they have any outstanding loans? • What types of loans? • Are the loans unsecured or secured? • Are they current on loan payments?
- 11. Credit Management Skills • Understanding of credit applications • Understanding of state laws, FCRA & the FDCPA • Communication skills • Negotiation skills • Skip tracing/location skills • Mediation skills • Organization skills • Patience
- 12. What’s in aCredit Policy? • How to apply for credit • Late fees, interest fees, collection, court or bad check fees • Repayment terms & conditions • Credit limits • Buyer responsibilities • Seller liability
- 13. Correcting debt collectionmistakes • Enforce your credit policy • Research the debtor or past due customer • Ask for payment immediately • Research & retain a debt collection agency so when the time comes you are ready
- 14. How much creditis enough? • Do they pay their other bills on time or late? • Are they always past due? • Is there a seasonal pattern? • Is the poor payment because of marital issues, the economy or employment issues? • What are their anticipated monthly purchases? • Will they pay COD while you make a decision?
- 15. Quick Fix! 1. Print out Credit Applications 2. Give one to every customer 3. Have it filled out and signed 4. Check ALL references 5. Decide if you want to extend them credit
- 16. When a customeris past due • Refer to your credit policy • Make a collection call • Send a friendly reminder • Send a not-so friendly reminder • Revoke their credit • Follow up!
- 17. Change bad habits •Review your A/R Weekly • Collect as much money as possible • Stay focused, deal with excuses firmly
- 18. Resources Free Credit Applications – www.MichelleDunn.com/free.html – My blog: www.Credit-and-Collections.com – Books: http://www.amazon.com/ also available for Kindle – FDCPA – www.ftc.gov • FDCPA e-course – www.MichelleDunn.com • FDCPA e-book – www.MichelleDunn.com Thank you!
Editor's Notes
- #2 Learn more at http://www.MichelleDunn.com and http://www.Credit-and-Collections.com