When should companies contact clients regarding unpaid debts?

Companies frustrated with their clients because they have not paid their debts often worry about coming off too strong if they continually ask for payment. The Credit Research Foundation has established an effective follow-up strategy to help organizations contact customers and obtain collections.

According to the CRF, businesses should contact their clients who promised to send a check on a particular date if the payment does not arrive. If companies fail to do this step, their customers may feel like they hold the cards in this situation.

For organizations that have structured a payment process over time, the length between payments should be as short as possible. The CRF encouraged companies to ensure all payout plans are documented and signed.

"Send two copies of your confirming letter to the customer along with a prepaid addressed envelope," the CRF said. "Ask them to sign a copy of the letter, acknowledging that they understand and agree to your plan, and return it to you. In any confirming letter, you should state that if the customer does not adhere to the agreement, the entire amount is immediately payable in full."

The organization concluded that businesses should keep several points in mind when going through the collections process. These include being ready to stop shipment if client checks are not received or payment has not been agreed upon and ensuring the legal department reviews all legal agreements beforehand.

Collecting debts can be a stressful process, but there are ways for companies to boost their operations. For example, experts have praised collections software because it enables businesses to streamline their collections procedures and track their client accounts much easier than tedious manual methods.

Mobile devices becoming ecommerce staple

The advents of mobile devices like smartphones and tablets has made it possible for shoppers to satisfy their online shopping needs like never before. A recent survey of 19,000 consumers worldwide conducted by WorldPay revealed that so-called "always on" shoppers are the driving force behind the ecommerce industry.

The study revealed that global ecommerce shoppers spend 22 percent of their annual earnings on online products and services and spend five hours monthly shopping online. Another 46 percent of consumers said they watch television while they shop and make the majority of their purchases at approximately 10 p.m.

No longer restricted to browsing the internet through a computer, shoppers are now branching out. WorldPay said that 55 percent of participants use a laptop, 19 percent shop through a smartphone and 11 percent do so using a tablet computer.

Heavy spenders, in particular, are using mobile devices more than other consumers. These shoppers spent 30 percent of their disposable income online in the past year and 67 percent of these participants have used a tablet to shop in the past three months, compared to 55 percent who have done so through a smartphone.

"Online shoppers are becoming increasingly mobile, no longer chained to their PC to buy goods and services," WorldPay chief product officer Philip McGriskin noted. "The way shoppers engage with mobile devices is evolving and driving the future of ecommerce as consumers look to purchase through apps, mobile websites and using their device on the move."

With so much money being spent online, companies have an opportunity to tap into a burgeoning industry. With Sage Mas 500 solutions, experts agree that business-to-business organizations can offer their clients improved ecommerce experiences and more effective order delivery capabilities. 

Study shows majority of businesses not leveraging mobile ecommerce

Companies with online retail websites know the importance of catering to their customers' needs, but many businesses are not using successful ecommerce strategies. A recent study conducted by an Ohio-based website design, development and integration company found only 17 percent of organizations have a mobile version of their websites.

An executive at the Ohio company noted that industry perception is that most companies have adopted a mobile strategy, but this is not the case, especially among small and medium-sized businesses.

"Many retailers struggle not only to define their mobile strategy, but also to ensure that the content and design in the mobile channel support that strategy, all while working within the limitations that exist with some ecommerce platforms," the executive added.

He also said that organizations looking to improve their online offerings can use ecommerce solutions to avoid significant costs or even IT downtime.

One such ecommerce solution is the Sage Mas 500 platform, which helps business improve their operations quickly. Experts agree the system is ideal because organizations can offer their clients with a better ecommerce experience and more effective order delivery capabilities.

In person, phone calls considered best bets for contacting debtors

Once a company has established metrics for its collections process, it's time to focus on how to go about retrieving a debt. According to the Credit Research Foundation, businesses must determine who to contact.

"You should obtain the name of the individual who has the authority to issue payments when you begin your initial credit investigation," the CRF said. "In larger organizations where you do not normally talk to the owner, also obtain the name of the buyer/purchasing agent and perhaps even the person in charge of the receiving department."

The CRF said companies should have a hard copy of all their client's information available before contacting the customer. This data should include contract numbers, purchase orders, unapplied checks and disputed cases, among other information.

The most effective collections method is a face-to-face interaction. According to the CRF, in addition to actually hearing what the client is saying, body language and facial expressions can be studied as well. Businesses should encourage customers to meet them at the office or at a neutral establishment to avoid costly personal visits.

While face-to-face meetings are certainly helpful, a telephone call is considered the most cost-effective method. The organization stated that speaking with clients on the phone is useful because companies can listen to their customers and still have access to all of their information.

Companies are always looking for ways to operate more efficiently and those businesses constantly collecting payments can use collections software to their advantage. For example, a vendor recently conducted a study and found that nearly 80 percent of respondents said they would use collections solutions in the future in order to collect debts. The main benefit of such systems is that they help customer service departments receive debt case updates more effectively.

e2b software Announces Private-Label Agreement with Epicor for Anytime Collect Credit and Collections Management Software

CHARDON, Ohio, April 27, 2012 – e2b software (www.e2bsoft.com) announced today a strategic alliance and original equipment manufacturer (OEM) agreement with Epicor Software Corporation to private-label its Anytime Collect (www.anytimecollect.com) credit and collections management software for Epicor enterprise resource planning (ERP).

Epicor®, a global provider of business software solutions for the manufacturing, distribution, retail and services industries, will market the application as Epicor Cash Collect available to Epicor ERP customers. Epicor Cash Collect is a new module that extends the capabilities of Epicor ERP with automation and workflow to help businesses better manage accounts receivable, reduce days sales outstanding (DSO), and improve cash flow and access to cash.

“The latest release of Anytime Collect was designed for companies like Epicor to provide private-labeled credit and collections management applications for their customers,” said e2b software president Lynne Henslee.  “We anticipate this being the first of many major private-label relationships for Anytime Collect.”

The Anytime Collect log-in process defines the logos, icons, and branding for the associated private-label partner and their customers allowing Anytime collect to be quickly deployed as a private-labeled application for software publishers, industry associations, financial institutions, or other organizations who want to provide complimentary accounts receivable collections capabilities to their customers.

“The addition of Epicor Cash Collect to the Epicor ERP suite is very timely, as we have a similar collections application for another Epicor product that’s been very popular with our customers,” said Chris Purcell, product marketing manager at Epicor. “Epicor Cash Collect provides enhanced functionality for Epicor ERP customers to help them get more value out of their ERP investment. It’s the right product for our customers since it scales from small to large credit departments, is easy to use, available as a purchase or Software-as-a-Service (SaaS) subscription license, and deployed via the cloud or on-premise.”

Epicor will sell Epicor Cash Collect via direct sales and Epicor channel partner sales. Epicor will provide frontline support for Epicor Cash Collect.  For more information, visit www.epicor.com/cloud/cashcollect.

About e2b software

e2b software (www.e2bsoft.com) develops software-as-a-service (SaaS), cloud-based business software including Anytime Collect (www.anytimecollect.com) accounts receivable collections software. Anytime Collect integrates with popular accounting software enabling finance professionals to reduce receivables, track activities, automate communications, and manage disputes.

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Epicor is a registered trademark of Epicor Software Corporation.

Planning key to ecommerce success, expert says

The ecommerce landscape has quickly evolved in the past decade, making it more difficult for companies to stand out from their competitors. According to a recent Practical Ecommerce report by contributor Dale Traxler, a new strategy has emerged in 2012 regarding this trend.

The writer asserted that ecommerce companies currently lack any product that makes them unique, and an impressive website or business solution is hardly a competitive advantage anymore. To succeed in this market, organizations are encouraged to develop extensive planning initiatives.

"If you are building a new house, for example, you have a vision, get a design, build a model, develop a blueprint from that model and then hire a contractor to build it," Traxler wrote. "If you are building or expanding a business, you need to have a vision of what you want to do, build a model, develop the strategies and plans and then execute the plan."

Although the ecommerce industry may lack key differentiators between companies, businesses can still improve their operations with the help of Sage Mas 500 solutions. Experts agree these systems are ideal for business-to-business organizations seeking ways to offer their clients improved ecommerce experiences and more effective order delivery capabilities. 

When should a business start its collections process?

Companies never want to draw out the collections process longer than needed, but a business must determine when is the opportune time to begin trying to retrieve its client debts. According to the Credit Research Foundation, customer invoices should have the answer and should specify when collections will take place and how a customer will pay.

The CRF asserted that when a company actually starts its collections process is dependent on several factors, including its financial and competitive situations.

"Some industries, due to their competitive nature are notorious for not following up for 30-45 days after the due date, thereby extending terms," the CRF said. "If your company is dominant in your industry, you stand a better chance of having your customers adhere to your terms than if you are a small company, or new in the market, trying to expand its customer base."

The organization added that companies should develop some type of metrix system to provide an overview on how they will collect unpaid debts. For example, a letter or phone call can be made between five and 10 days after a due date, while follow-up communication is typically needed for days 11 to 20 of unpaid debts. According to the CRF, a third call and letter should be sent between the 21st and 30th day and orders should be held between the 31st and 45th day.

The CRF concluded that businesses are encouraged to call their clients for a fourth time and send a final demand letter between days 46 and 60. After this time, companies should file for collections.

Not every company will retrieve all of its debts, but businesses can improve the overall process with collections software. Businesses using such systems can integrate them with their older technology and effectively streamline their collections operations. 

Awareness is the first step in collections process, CRF says

At times, businesses have to put a lot of effort into collecting their client debts, but awareness of the customer's situation is considered the first step in improving the overall process, according to the Credit Research Foundation.

The CRF indicated that companies must be cognizant of what is happening with the current economy, their own business, their industries and with their clients.

"The same investigative and analytical techniques which are used for credit approval are valid for the collection process," the CRF said. "Unless you have some idea of what your customer's problems may be and why they are paying you slowly – or not paying at all – you may not take the correct first crucial step in collection."

Before contacting a client regarding an unpaid debt, the CRF suggested that companies make sure any internal situations are taken care of beforehand. These can include unapplied checks, unresolved billing disputes or any special payment plans offered by sales representatives.

There are so many variables in the collections process that it can be difficult to effectively retrieve client debts. However, experts have suggested that collections software can help businesses streamline their operations and ensure their customer data is always accurate.

Business 2 Community's Jeff Adelson-Yan recently offered several ways companies can improve their collections practices. According to the writer, businesses should have their customers' information readily available so they can view past payment history and negotiate due dates more effectively.

Adelson-Yan also encouraged organizations to offer their sales reps incentive programs for closing out deals in a timely fashion. These concessions can also be applied to clients to make sure they pay future debts on time.

Client communication essential to improve collections process

The Credit Research Foundation has suggested many ways companies can improve their collections strategies, including proper communication with their clients. According to the CRF, once a business has followed up on debt, discussing the delinquent account will make receiving payment more likely.

"That is why emphasis is placed on inviting the debtor to talk," the CFR suggested. "The object of the discussion is to get the debtor's explanation of the delinquency. It may be a question of a dispute; it may be due to a temporary shortage of funds; or the customer may intend to hold off payment so the creditor's money can be used in its own business."

The organization also noted that when discussing a client's debt, a company may be able to gain greater insight into why payment has not been made. This can include a cash flow problem, in which case a business can offer its customer slower payment methods, but it must be asserted that the process has to be completed.

The CRF encouraged companies to keep a level head when dealing with delinquent accounts. Just because a client is struggling to pay on time does not mean it is a bad customer, so preserving goodwill is essential. Organizations are encouraged to develop specialized care to meet certain industry demands, which can help to better understand client needs.

Companies seeking fast payment from their clients know the process is never easy, and storing customer information can be a pain when upgrading to a new system. With collections software, however, businesses can integrate their previous solutions into the new one so they do not have to enter information all over, achieving a more streamlined operation.

Follow-ups key to proper collections practices

For companies trying to improve their collections methods, there are many factors to consider. According to the Credit Research Foundation, businesses should determine how long a debt has been unpaid, if the client has made an effort to uphold its obligation and the length of their customer relationship. The CRF added that organizations should also take into account whether their clients have paid in the past when deciding on a proper course of action.

The organization asserted that the primary role of the company collecting debts is to receive the payment as close as possible to the terms of the original agreement.

"The debtor has an obligation to pay within the terms of the agreement," the CRF said. "It is the job of the collection person to make sure that this obligation is met. The tone may be indulgent at first, but should be intensified and accelerated as much as necessary to ensure payment by a debtor."

Businesses must then develop a system ensuring follow-up protocol for debts unpaid. According to the organization, if a company is told a check has been mailed, it should make a note, and if the payment is not received at the exact time as agreed upon, another follow-up is necessary or the collections process will fail.

To effectively collect debts, companies must develop thick skin and proper protocol. But businesses with a large number of accounts to keep track of can improve their operations with the help of collections software. Such systems help streamline collections processes and keep track of account activity more effectively than manual methods. For organizations with older software in place, the solutions can be integrated so client information doesn't have to be input again.

Policy considerations key to successful collections

There are many ways companies can improve their collections process to ensure debts owed to them are paid on time. Although not every client hands over its money when it's due, there are several tips businesses can use, according to the Credit Research Foundation.

The CRF suggests that organizations focus on ways to collect payments without damaging their client relationships. If a customer fails to pay on time, there are different approaches to take, including taking a look at their policies.

"The collection problem should be analyzed and the collection policy defined in accordance with such objectives as: the policies of the selling division involved with the problem, the economic climate in general, the importance of the customer [and] the effect of the combination of dollars and number of customers delinquent on the entire receivables portfolio," the CRF stated.

Certainly not every company fails to deliver its payments on time, so not every business is out there searching for collection tips. However, experts agree that collections software in addition to policy considerations can help organizations improve their operations and store their accounts more accurately than other methods.

Companies must be persistent to retrieve debts

When it's time for clients to pay up, some fail to deliver, leaving many businesses hoping they will receive their payment in a timely fashion. However, this process can be drawn out longer than many want and leave companies frustrated.

A Credit Today report highlighted how businesses must remain calm and collected to receive their payments. The news provider cited an East Coast credit manager who said if her company has not received a payment by the 35th day, it calls the client to discuss the matter. However, before this call is ever made, the organization researches the customer and ensures it has prior purchase reports and other paperwork within reach.

She also told Credit Today that she does not call clients demanding payment, but asks the customer why payment hasn't been made. If the customer says the check is on its way, she indicated, it is wise to ask for the check number. If it still doesn't arrive in five or seven days, a follow-up call may be necessary.

"I try never to become irate or talk louder than the customer," the credit manager told Credit Today. "Each time I make a call, I write the name of the person I spoke with in my system. That way, if I have to make a follow-up call, I will know whom to contact to follow up on the previous conversation. If you can make contact with the same person the second time you call, you have a much better chance of getting paid."

Persistence is certainly key in retrieving debts, but there are other ways to improve the process. For example, collections software can be integrated with existing technology and help businesses streamline their operations and manage their customer accounts more effectively.