Maximize Your Collections

Crucial Steps for Proactive Credit Management

Presented by Michelle Dunn

What is Credit Management?

• Management of business credit, A/P & A/R• Policies & procedures regarding payments• A plan for revolving credit customers• Guidelines for collecting money• A Streamlined system for contacting

customers• Avoiding bad debt

Objectives

• Payment options• Setting credit limits• To eliminate bad debt• Collecting money• Dealing with past due customers

A Credit Policy Must:

• Be tough & flexible

• Offer specific guidelines for action

• Be enforced!

Credit & your Customers

• Be fair, reasonable and follow the law• Protect yourself & your business• Always check all references

Extending Credit• Credit applications• Fill out & sign• Keep original & give customer a copy• Check all references• Determine & set a credit limit• Send customer deny or accept letter

New Customer Packets

1. Credit application2. Credit policy

Extending Credit

• Make it Easy

• Make it Quick

• Make it Painless

Credit Risk

To Minimize your Credit Risk:

–Get a personal guarantee–Offer month-to-month credit–Offer ship-to-ship credit–Get a security deposit

–Get a 50% deposit on every order

When checking references ask:

• How long have you known the customer?• How long have they done business w/ you?• What payment method do they use?

• Do they pay within terms, late or use discounts?• What is their average monthly orders?• How often do they order from you?• What is their balance due now?

• Is any of that past due? How much past due?• What are your terms with them?• Do they make any returns?

When checking a bank reference ask:

• Is this a business, personal, savings or checking account?

• When was the account opened?• What is their average daily balance?

• Have they had any NSF or other returned checks?• Do they have any outstanding loans?

• What types of loans?• Are the loans unsecured or secured?• Are they current on loan payments?

Credit Management Skills

• Understanding of credit applications • Understanding of state laws, FCRA & the FDCPA• Communication skills• Negotiation skills• Skip tracing/location skills• Mediation skills• Organization skills• Patience

What’s in a Credit Policy?

• How to apply for credit• Late fees, interest fees, collection, court or

bad check fees• Repayment terms & conditions• Credit limits• Buyer responsibilities• Seller liability

Correcting debt collection mistakes

• Enforce your credit policy• Research the debtor or past due customer• Ask for payment immediately• Research & retain a debt collection agency so

when the time comes you are ready

How much credit is enough?

• Do they pay their other bills on time or late?• Are they always past due?• Is there a seasonal pattern?• Is the poor payment because of marital issues,

the economy or employment issues?• What are their anticipated monthly

purchases?• Will they pay COD while you make a decision?

Quick Fix!1. Print out Credit Applications2. Give one to every customer3. Have it filled out and signed4. Check ALL references5. Decide if you want to extend them credit

When a customer is past due

• Refer to your credit policy• Make a collection call• Send a friendly reminder• Send a not-so friendly reminder• Revoke their credit• Follow up!

Change bad habits

• Review your A/R Weekly

• Collect as much money as possible

• Stay focused, deal with excuses firmly

ResourcesFree Credit Applications

– www.MichelleDunn.com/free.html– My blog: www.Credit-and-Collections.com– Books: http://www.amazon.com/ also available for Kindle

– FDCPA – www.ftc.gov• FDCPA e-course – www.MichelleDunn.com• FDCPA e-book – www.MichelleDunn.com

Thank you!