How to improve your company's collection management

The correct one administration of the field financial of a company greatly influences the success of it, and collection management is vital. Since, the objective of selling a product or a service is to obtain benefits in return, and in this case, monetary benefits. Companies need to face their expenses in the short and medium term, and if they do not find a way to collect your bills Within the agreed period of time, they have to seek financing from another source and thus can accumulate debts that take the business down an inadvisable path. Therefore, in this post we want to help you by giving you some advice on How to improve your company's collectionsWhat can you do to make the administration of unpaid debts be effective and efficient.

What is collection management?

It refers to the planning through effective and efficient strategies in relation to the invoices that the various clients have with a company. Needless to say that you are strategies are very necessary for face certain obstacles that can be presented to the company during the claim of the bill payments. Poor financial organization of collections can trigger a late payment by debtors, and therefore, a lack of solvency for the business itself.

In transactions in which companies sell certain physical merchandise, they usually do so by accepting as pay at that time one debtor's promise. This is what is called "credit sale", a bill collection system that is currently widely used but that can sometimes not be beneficial to the seller.

Likewise, it is important to offer an image that, although profitability is offered at certain times, the company needs those collections within the period in which it had been established. The security and firmness in the fulfillment of the agreed agreements must always be present so that this situation not harm your business in any way.

It is necessary to mention that the collection of an invoice does not have to be managed by the same staff dedicated to the sales. They are completely different tasks that require different strategies to improve your performance. In the following section, we give you some advice on what you can do in your business to improve the actions dedicated to the charges.

How to improve this type of management?

In every company, the way in which it develops the organization is one of the fundamental pillars for optimize your performance. Therefore, each of the departments must be clear what is your function and what is the best way to play it. Specifically, for the invoice collection procedure from your customers, we give you some suggestions like the following:

 1. Plan: study your buyer's situation well

The customer creditworthiness It is a piece of information that can be of great help if you have doubts about a transaction with him. Even if you do not have them, it is recommended that pay attention to certain details. It's a old customer with whom you have already had business? What is your payment history?That collection guarantees has? In this way, you can predict whether or not this customer will be late in paying and what can you do about it so that it does not affect the collection.

2. Expose: define the advantages of making the payment

Trade agreements are very diverse, so you have the advantage of aadapt that commercial contract to the benefit of both parties. During this negotiation, you can present the arguments in favor of the debtor if he pays within a set period, an agreed amount, etc.

3. Clarify what consequences there will be if the payment is not made at the agreed time

It is one of the points that both you and your client should be clear about. It is a form of persuade the debtor and make him see that actually making the payment is more beneficial to him than the option of not making it.

The bad image that generates delinquency in a company can be a very valid argument to present to the debtor. After all, a bad image generates a series of negative events for the company, which can culminate in loss of clients.

4. Negotiate: plan an alternative payment plan

In the event that the debtor does not comply with the payment established on the corresponding date, it is necessary have an action plan to get that payment it becomes effective. This type of strategy is what you can generate with your team. Define each of the steps that can be taken, and what results can be obtained with them.

5. Press: use tricks to induce payment

This does not mean that you use intimidation or legal channels first if the debtor has not paid when they should. We give you some advices what can you continue in this situation:

• Respect must always be present. Bad manners should not be used in a negotiation, since they can make you miss the point. The goal is to reach an agreement with the debtor about the payment, and how it can be done in a way that benefits both parties.
• Structure your arguments. Improvising in this case is not recommended. A well-argued idea can influence the other person, which is what you want in this chaos. In addition, you must get the debtor involved in the conversation by touching on topics that also interest him.
• Work the recognition of the debtor. This will help facilitate the connection with the debtor, and make him more receptive to the arguments that you are going to present.

6. Factoring: look for an alternative

He factoring It is a financial instrument that allows the collection of customer invoices in advance. A financial entity assumes this type of debt, since it is in charge of ensuring that the debtor pays it in due time.