It is a general notion that collection process ought to be initiated once invoices are due or have been left unpaid. However, a vehement strategy is one wherein the emphasis upon accounts receivables management is placed during the initial stages of client selection & verification.

Especially in the case of B2B collections, where each transaction corresponds to sizeable proportions in terms of spending, ascertaining a prospective client’s credit worthiness is of critical relevance. Pre sales verifications / partner verifications ought to be a nonnegotiable element of the accounts receivable management policy. Moreover, terms relevant to the credit policy, payment options, product / service specific payment cycle, due dates, etc. ought to be thoroughly worked out! After all the eventual aim is availability of liquid funds required to maintain the business cycle. 

How can it help?

The amount to be received upon successful completion of a project or delivery of stipulated goods & services falls under the accounts receivables category. Given the current business challenges, operating on lucrative credit terms is not an option that can be skipped. Thus while businesses are faced with tightened financial constraints, early stage verifications can prove to be a rather effective tool.

The verification process shall enable fulfillment of two key purposes. One, by establishing business credibility, pre commercial credit business verifications ensure that the partners / clients do not have prior delinquent loans to a sizeable amount and their asset or capital holdings are at par with the current business orders.

Commercial debts are a tricky impediment in the progression of a company. While the businesses rightly focus their energies on product development, marketing, operations & logistics and thus revenues, unpaid invoices linger on as an anchor obstructing the pace. Given the tough competition and industry standards, open credit lines are a mandate for existence; however these cumulative debts, more than often, curb the machinery by creating liquidity obstructions. Initially what appears to be a trivial amount, eventually snowballs into a massive debt situation thereby impacting the basic PnL of the setup.

Journey so far…

The problem is rather intricate but it is definitely not new. Since the beginning of commercial existence, tradesmen have had to deal with the menace and given that the problem was known, several attempts have been made to counter.

One of the oldest weapons deployed to combat B2B debt collection issue was barter system. A principle revolving around the simple equation of give and take. A good in exchange for a good, service in lieu of service. While the approach is theoretically logical, shortcomings are abundant & apparent. 

Another notion that has been the preferred mode involves advance part payment. These payments are often charged to source raw material & labor required to complete the assigned task. The method certainly provides a security blanket to the supplier, however once engaged in a chain or regular trade, supplier and customers tend to go easy on the pre-defined advance terms and credit side tends to bloat with every new transaction.

Accounts receivables management – invoicing…collections

Successful execution of the collections process is reflected in improved cash flow and available working capital. These are two components of the financial statements, which are critical for business continuity and can be managed by implementing a robust debt collection strategy. Key components of the collection process are:

• Call followed by a written notification
• In absence of a response site visit / one to one meeting planned
• Time established for detailed discussions regarding dues 
• In an eventuality of a dispute, claims corroborated with respective documentation / contracts. Credible gaps reported to & discussed with client.
• Upon consolidation, negotiations undertaken to clear the dues in a timely manner. 

The entire process and various stages of follow-up are meticulously documented & reported via ‘ZZ’. Cases depending upon complexity and nature of transaction to assigned to collection agents with the required expertise to undertake appropriate action. While the stated is being undertaken and communication is ongoing with debtor, extreme caution is ensured to maintain business relationships between creditor & debtor. Senior managers maintain vigilant controls over the B2B debt collection process, ensuring that all compliances are met & fruitful outcomes are enabled.  

Commercial debt collection letters are basically reminders or demand letters for overdue payments. Depending entirely upon the category in which they land in at a particular time i.e. reminder or demand, the tone of the letter is to be framed. While in both cases debtors are informed about their dues to the creditor, it is vehemence with which the letter is framed that differentiates.

Common denominators

B2B / commercial debt collection letters or e-mailers ought to contain complete information regarding the corresponding transactions. Date of agreements, delivery dates and headings, invoice particulars, advance payments if any and references to previous written correspondence regarding the service agreements under consideration have to be provided in a clear & concise manner. 

The differentiators

Collections for the purposes of account reconciliations & receivables management require repeated and consistent follow ups. Initially the nature of letters / emails is deliberately mild. The purpose is not to antagonize the client but instead remind the debtor of the dues. It is possible that the issue at hand could merely amount to discrepancies in recorded items or due to variations in accounting reporting formats. In such cases, initial reminder letters serve the purpose by way of opening communication channels towards account reconciliation matters. These initial reminders, mentioning the dues contain all the relevant transaction info, along with due dates for the accrued debts and thereby seek clearances. 

In the world of debt collection, collection agents are an asset to a company and the creditors are their fortune. Productivity of collection agents is directly proportional to the revenue generated by a collection agency. And as well discussed, the current post-COVID market is a goldmine for collection agencies targeting creditors with a vast portfolio of debts invested with multiple debtors. Approaching this opportunity with the classical methodologies of manual creation of tasks and management of collection cases should be considered a naïve and time annihilating practice.

Introducing ZZ – ZZest CRM’s Communication Bridge

In the new age of social distancing where virtual meet-ups have taken over field visits and huddles have turned into conference calls, debt collection has taken a huge leap forward with the automation of involved processes. The automated system ‘ZZ’ manages and creates collection cases with the click of a finger. Keeping track of your cases is super convenient. With a single point of control and secure access from multiple devices, the communication tool at ZZest is devised to keep you posted in easiest & most time effective manner. Debt repayment, communicating case status with creditors and follow-ups with adamant debtors are some time consuming and efficiency affecting exercises that are seamlessly managed through automated systems in place. All hail technology because debt collection is a plain sailing business this point forward.