Collection policy

In the event of overdue or unpaid accounts, having a collection policy in place will assist you in what steps to take with your customers and when to take them.

The first step to take, as soon as the account becomes overdue, is to send your customer a reminder letter letting them know when their payment was due, how much is owed, and requesting that they settle their account within a specified period. One week to 10 days is generally considered an appropriate amount of time to wait before taking further action.

The second step, should the account remain unpaid, is to contact the customer by phone, reminding them again that their payment is overdue, and outlining any possible consequences should they continue to delay payment. It is important to remain polite in such instances, to maintain customer relations and avoid making the situation worse.

The third step to take if the first two have not yielded positive results is to enlist the services of a collection agency. This will incur a fee from the agency, so it is important to judge whether or not chasing the account is worth the financial cost and the cost in time and effort, or whether you are better off taking the loss and removing the customer’s line of credit.

Finally, in extreme circumstances, it may be necessary to take legal action. Before taking this step, make sure that you consult a specialist for legal advice to ensure that you are acting according to the law.