B2B Debt Collection

It is crucial to take action on your older commercial and business to business accounts receivable as early as probable. Immediately after an account becomes past due, either your own staff or your partner in commercial collections ought to be attempting to obtain payment in full. But you need to enhance your odds of successful recovery. Side by side, you even need to take strategies to minimize your bad debt and costly write-offs. Mentioned below are the tips for more effective commercial and B2B debt collections:

Provision of Easy to Understand Billing Statements and Invoices

It is commonly said that the best way to reduce bad debt is to avoid it all together. One quick and easy way businesses can drastically minimize unpaid accounts is giving their billing statements and invoices a face-lift. The information provided by you in these documents actually can play a huge role in the determination of the number of accounts that have gone unpaid. To illustrate, you must ensure the contact information of your company along with the clear visibility of the payment options provisional on all billing statements and invoices. After all, the good thing is to ask a business to pay you, if they are not aware of doing it in the first place. If you are inquiring that businesses pay via check, make sure to include your company’s mailing address. If you offer an option of online payment, you must ensure the inclusion of the URL to your website or online portal of payment. Or if you prefer businesses pay by phone, never should you forget to proffer the phone numbers and hours of operation of your company. It looks like it is quite simple, but far too often companies are seen that are unable to include this information in their billing statements or invoices.

Lastly, a clear explanation of the charges, a business is responsible for paying, must always be included. There has to be a description of the rendered services or the details of the unsettled debts and then of course the amount owed and the payment due date has to be included. When all of this critical information is included, it is ensured that your business partners and customers are bound to know how much they owe, what date they are expected to pay by, and most importantly, how to put forward the recompense.

Check whether your business is having a clear account receivable management strategy. You must ensure the action taken the day after an account becomes past due. Also consider the day before the account becomes past due. What is to be done after 30 or 60 days? It is suggested to send payment reminders and make collection calls at all of these intervals. Then once, for over 60 or 90 days an account is delinquent as dependent on your collection approach and A/R management policies, it is highly recommended to outsource the debt to a 3rd party commercial collection agency. If you continue to take the same actions over and over for a longer period of time, it will usually go against you. Also, are fees charged for late payments? How much appropriation and effectiveness is there for avoiding slow payers? The important thing for all offending accounts is to follow a consistent policy. Not only this will set clear procedures and expectations for your collection staff, but as well, even for your business partners and customers.

No Hesitation in Offering Payment Plans

Obviously you would always like to collect on time and in full, your accounts receivable. But in today’s still-lagging economy, with bad debt on the ascendancy, likely you will need to be a little flexible in context to payment arrangements. The businesses ought to be given the option to settle their accounts in weekly or monthly recompenses if they are struggling to pay in full all at once. Installment plans, deferred payment agreements, or partial payments are other common B2B payment arrangements. Yes, these sorts of payment plans do take time and you may not be paid as quickly as you’d in the vein of, but for maintaining positive business relationships and ensuring that you are eventually paid in full, they are great techniques.

CCAA (Commercial Collection Agency Association) Membership

There are more than 7,000 debt collection agencies in the globe. And most of them will tell you they can handle commercial (business-to-business) collection accounts. But obviously, you would prefer the availability of best results instead of your accounts to be merely “handled”. The fact is, commercial and consumer collections are two very different animals. And, in spite of of what they promise, the bulk of those 7,000 collection agencies has little experience, if any, in collecting from businesses.

Membership and Certification Requirements

Membership in the CCAA is limited to, commercial agencies that meet the organization’s rigorous criteria, including:

  • Experience: Member agencies must have been at least four years in business prior to application for membership. A minimum of 80% must be commercial account collections of the collection business of the agency.
  • Financial Responsibility: A separate Trust Account must be maintained by members to hold all funds belonging to its clients (creditors), thus keeping them from being mixed with the agencies’ own accounts. Trust accounts are analyzed per year twice by the CCAA Executive Director.
  • Ethics: Members are required to subscribe to the CCAA Code of Ethics, which sets ethical standards for dealing with customers, debtors and attorneys. Failure to adhere to those standards can cost the agency its certification. A surety bond of $300,000 minimum is required. The member has to comply with all appropriate local and state regulations.
  • Continuing Education: Members must complete 60 continuing education credits per year and attend regular CCAA meetings.
  • Oversight: Random site visits must be allowed by the members from the CCAA Executive Director.

The CCAA works to elevate the commercial collections industry by providing educational, legislative, promotional and administrative services to its members. Its central point of concentration is the creditor. The organization works to ensure that its member collection agencies provide commercial creditors with the highest level of professional services and ethical treatment to the creditor and debtor simultaneously.