Maximizing Recovery In Accounts Receivable Collections

If you sell on credit, at some point you’re likely to have collection issues.  Fortunately, you can develop internal policies for detecting problem accounts early and collecting them with or without litigation.  This article will discuss several useful policies for collecting accounts receivable.

Policies That Maximize Recovery In Accounts Receivable Collections

Smart processes for collecting accounts receivable will help you identify past-due accounts, find amicable solutions, or if you have to litigate, increase your chances of winning and collecting a judgment.

Here are some important policies you can adopt, each of which we’ll discuss more fully in separate articles. 

  1. Identify Issues Quickly

    The longer an account remains unpaid, the harder it usually is to collect.

  2. Reach Out To The Customer

    Be proactive.  Calling the customer about your unpaid invoices will identify who’s evading you, who has a genuine dispute, and who’s just having trouble paying.

  3. Know When To Settle

    Settlement can be helpful when the customer has a good-faith dispute, or where it has limited ability to pay.

  4. Know When To Sue, And When Not To

    The decision to sue should be a pragmatic one.  Always consider the return on your investment.

  5. Gain Home Field Advantage

    If you ever have to sue an out-of-state customer, make your customer do the traveling. 

  6. Keep Proper Records To Win And Collect

    Good records are vital to winning and collecting a judgment.

By developing these policies for collecting accounts receivable, you can increase your revenue by identifying problems early, and either resolving them amicably or obtaining and collecting a judgment.

For more information on collecting accounts receivable, or if you’d like to discuss a specific collection issue, call me at 856-667-1669 or contact me here.

This material is for informational purposes only and should not be construed as legal advice.  No person should rely on this information without seeking the advice of an attorney.

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