Collections for Each Type of Delinquent Customer
Handling delinquent customers requires smart strategies. These can change based on whether a debt is starting, growing, or has become quite late. For each group, there are different ways to get the money back, and technology can be a big help in this process.
Each customer is unique, with different needs and circumstances. This is particularly true when it comes to customers in debt. They have traits that reflect their commitment to fulfilling their payment obligations.
Companies must focus on effective collection actions according to the type of customer. Segmenting the debt allows for the establishment of differentiated measures in collection strategies.
In an era of continuity and immediacy, choosing effective collection strategies is necessary. AR departments must take intelligent actions to collect funds on time.
Technology provides the tools to avoid complex manual tasks and save time for more productive activities. Analyzing data and identifying each delinquency type is necessary to focus efforts correctly. Here's where software to optimize and speed up the AR processes becomes relevant.
Keep reading to learn everything about delinquent customers and how to deal with them.
Collection Actions According to the Type of Delinquency
Companies should establish collection actions according to the different types of delinquency. Based on specific periods, it is possible to identify three types:
- Preventive collection
- Early delinquency collection
- Late delinquency collection
To improve your cash flow, maintain a timely and consistent payment collection process. Tailoring your collection efforts based on your customers' delinquency level can improve your chances of recovering the outstanding payments and enhance your cash flow.
Preventive Collection Actions
Prevention is synonymous with efficiency and planning. To ensure effective financial management and smooth operations, it might be helpful for the AR department to prepare in the following way:
- Offer special discounts to encourage timely payment. Remember to stipulate interest or surcharges, including penalties for late payment.
- Send reminders of payment dates through simple channels such as SMS or email. Streamline these actions with the help of automation software.
- Have as many payment alternatives as possible. Different payment methods generate an environment of ease and speed in the process.
Early Delinquency Actions
Let customers know your company maintains efficient collection control and management. This will make all actions on current arrears preventive, easing later collection tasks. Achieve this through:
- Communication. One of the most effective collection actions is clear communication. Don't hesitate or be uncertain about the collection processes.
- Segmentation. Segment early delinquent debtors to differentiate them from those more challenging. This way, you can focus first on the most stressful or labor-intensive debts.
- Automation. Issuing items to collect, online communication, and payment can be automated. Sending automatic collection notices before the debt due date is essential to avoid delinquency.
A good collections plan involves reminders for customers before the end of the debt term. Having a system that executes the reminders as soon as the due date expires is beneficial.
Late Delinquency Actions
Late payment is generally considered when the user is 100 to 120 days past the due date. It's crucial to maintain the quality of communication. Remember that the difficulty of collection increases as the days go by. Thus, you must activate all your communication channels.
Avoidance of payment is an issue that should be taken seriously. Business-client ongoing relationships with clients oblige to take decisive action on overdue payments. A firm request can get clients back on track for timely remittance.
If traditional payment recovery methods seem ineffective, try a debt collection agency. Their expertise and experience provide them with various techniques for urging customers to make payments on outstanding debts.
Boosting Collections Efficiency with Paystand
Every B2B company needs to implement collection actions and focus them properly. This will provide the financial flow to maintain constant operations.
With Paystand, you can automate your AR processes and streamline workflows. It is the perfect ally to avoid high delinquency and lack of liquidity due to absent payments.
What can Paystand do for your company concerning collections?
- Improve the management process and execute effective collection actions.
- Help customer segmentation through monthly reports.
- Send personalized invoices automatically according to the habits of each customer.
Start preventing and take early actions towards more efficient collections. Don't be late to book a demo with one of our experts today!