Six ways to spring clean your collections
The new year is a great time to review your collections practices and effectiveness. Here are 6 tips for effective credit management and collections in 2024.
Many businesses only credit check their customers when they acquire them. With economic circumstances squeezing individuals and organisations alike, ability to pay can alter drastically in a very short space of time. It’s smart to monitor your customers and be aware of changing circumstances so you can offer help if needed. Warning signs could include customers paying later than usual or taking out extra credit for bills. Establish a timeframe for sending reminders. We recommend that you never wait too long, but instead send the reminder within a maximum of 5 days after the payment due date. Implement a procedure for initiating debt collection when necessary.
With credit increasingly taken out online, customers expect to have a range of digital options for payment and account management. In fact, almost half of European consumers (47 per cent) say they are more likely to spend money with businesses that offer flexible payment terms. This is especially true of younger consumers. Reducing the barriers to payment so customers are paying in the way that suits them most can improve collections. (Source: European Consumer Payment Report 2023)
Times are tight, but consumers are alert to ‘greedflation’ – where businesses raise prices higher than is necessary to meet their cost increases, or keep prices high when costs fall – almost seven in 10 say they would stop spending money with a business for this reason. As almost a third say they would feel less guilt about skipping a bill now than in the past, unethical companies could find themselves penalised.
Is the language you use with customers straightforward and clear? The new year is a good time to reconsider your approach if your letters and other communications are heavy on the jargon. Being clear about the actions customers should take and where they can go for help if they’re struggling can make a huge difference to relationships and payments.
The advances in AI, data and analytics can be put to use in the credit management and collections to advance anticipate customer behaviour, communicate in different ways and improve the customer experience at the same time. The new year is a great time to assess what’s out there and how you can keep up with the pace of change.
How much time are you spending chasing debts? Intrum’s research shows businesses spend an average of 74 days a year chasing payment at a cost of €275bn to Europe’s economy. That’s time that could be spent focusing on core activities and growing your business instead. If this sounds like you, it’s worth considering a partnership with a specialist who can take the strain and offer the latest technology and skills needed in today’s challenging environment.