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Compilation of strategies used by top-performing collectors across 15 industries
Suppliers need different collections strategies, depending on their customer base. While developing these strategies, it is important to understand that a one-size-fits-all approach can?t be applied to buyers across different sizes, industries, and business relationships. A very important criterion to develop collection strategies is for the company to KNOW THE CUSTOMER! Understanding the customer, in more technical terms, is what organizations refer to as Customer Profiling. In order to collect faster from your customers, you need to be able to predict how they are going to respond to a dunning activity. More often than not, businesses have a lot of customer data at their disposal which they could convert into intelligence and translate into the right collection strategy to achieve their objectives.
Categorize your accounts receivable according to the length of time an invoice has been outstanding. The different aging buckets to be considered are 0-30 days, 30-60 days, and 60+ days. Aging reports give you an idea of how much a customer owes you, and for how long, depending on which you could develop the most effective dunning approach for each segment.
Evaluate if your customer is a fast payer or a slow payer depending on their payment history. One way of doing that is to compare the average days of delinquency with the industry average. If the ADD is less than or equal to the industry average, then the customer is a fast payer, otherwise, they are a slow payer.
Based on the customer?s credit limit, payment history, amount of debt, reference checks, and related factors, you would be able to segment your customers into high, medium, or low-risk categories. The weightage assigned to each one of these factors varies from one company to another,† but the overall result is imperative to determine the right collection strategy that is more likely to produce successful dunning results.
HighRadius Collections Software automates and optimizes the credit & collections management process to improve collector efficiency, minimize bad debt write-offs, improve customer relationships, and reduce DSO. It provides a complete set of tools to optimize and automate the credit collections management process and enable the better prioritization of credit collections activities All the information you need (invoices, dispute information, POD, claims, tracking info, etc.) on each case is automatically presented in a collections work-space and is ready for use. Apart from the wide variety of benefits that it has, it also comes with some amazing features like CADE (Collection Agency Data Exchange), collector’s dashboard which has prioritized collections worklist, automated dunning & correspondence, dispute management, centralized tracking of notes, call logs & payment commitments along with cash forecasting functionalities. The result is a more efficient collections team that contributes to enhanced cash flow and reduced DSO.
HighRadius Corporation
2107 CityWest Blvd,
Suite 1100,
Houston, TX 77042
