Advice from Pro to Pro

Unpaid invoices: 10 best practices for collecting them

The recovery of the French economy now seems close to starting. However, the announced end of the State Guaranteed Loans involves a serious risk for all companies, VSEs, SMEs or Key Accounts: the risk of non-payment. How to preserve your cash flow and limit unpaid invoices? In case of late payment, what are the good reflexes to adopt to optimize your chances of recovery? How to manage debt collection within your company? If not, what are the right criteria for choosing a collection company without making mistakes? We tell you everything.

How to preserve your cash flow and limit unpaid invoices ? In case of late payment, what are the good reflexes to adopt to optimize your chances of recovery?

How to manage debt collection within your company? If not , what are the right criteria for choosing a collection company without making mistakes? We tell you everything.

ANTICIPATE DEFAULT BEFORE THEY HAPPEN

1- Evaluate the financial health of your customers before contracting

The tools for this:

Customized field surveys (business intelligence) that give you fresh information and answers to specific questions you have about your prospects or customers
financial information databases
Your sales teams or other partners may also have information to validate the health of your customers.

2- Frame the business transaction

Write clear and complete general conditions (penalty clause, return of goods clause, jurisdiction clause…), make sure that the important documents are signed (contract, GTC, order form, delivery form…) and that your GTCs are included on the back of your other documents (order form, delivery form, invoices).

3- Make your clients aware of the need to meet deadlines

Inform your customers about the amount of the expenses incurred in case of late payment (fixed compensation of 40 € per invoice paid late, late payment interest…).

4- Raise awareness of your sales cycle

Sales representatives: so that they understand how to negotiate the best terms of payment in the act of sale and the financial impacts of this negotiation, what are the different payment channels for their customers, what is the regulatory context…
The delivery and sales departments, etc., to deal with or anticipate disputes as quickly as possible.
Managers to better manage and communicate with simple dashboards, shared with all stakeholders…

Remember, a satisfied customer is a customer who pays on time and will be loyal to you. So, improve your customer satisfaction whenever possible, and you’ll get your cash back faster.

IF YOU MANAGE DEBT COLLECTION IN YOUR COMPANY

It is essential that your organization has the means to achieve its mission.

5- The objectives of your collection team must be clear to all

Make sure this is the case both inside the team (individual and collective objectives) and outside (what management expects of you).

6- Collection skills must be appropriate

Make sure that the people in charge of collection are motivated and well trained:

Well-trained staff will remain vigilant and take advantage of new techniques. Informed of the latest developments and news, he will be better able to make the right decisions
Knowing how to follow up and negotiate by phone, listening, understanding and identifying blockages are essential keys to convincing your customers to pay you, knowing how to compel them while preserving the commercial relationship.

7- Collection: processes, methods and tools must be modern and adapted

Collection software, modern and innovative telephone connection tools make it possible to contribute favorably to the success of your collection-related objectives (reduction of payment times, cash recovery, etc.).

8- Collection strategies: they must be well defined and adapted to each client

The main parameters that you must consider in the development of collection strategies:

the profile of the customers (private individuals, public/private market, work contract…),
the usual payment profile of the customers (good payer, expert, insolvent, negligent,…),
the nature of the claim (civil or commercial, service or merchandise…),
the amount and age of the claim.

Combine delinquency risk management with dunning strategies, and you’ll be able to take targeted, personalized, and therefore more effective actions.

Moreover, it is very important that your tasks are planned, coherent, paced and followed over time: remember, rigor always calls for rigor.

Finally, never let a customer pay you late on a regular basis, and always do what you say you will do (stop deliveries for example…), this will strengthen your image.

IF YOU USE AN EXTERNAL COLLECTION COMPANY

There are many advantages to using a collection specialist. It is important to choose the right partner.

9- Outsourcing your collection operations: the advantages

You are much better able to absorb peaks and valleys in workload
You refocus on your core business : collection companies can give you the benefit of staff with specific skills and devote the time necessary to follow-up/collection activities, a time that is sometimes long and which can prove to be very costly.
You preserve your image: you benefit from the expertise of a neutral intermediary to manage the customer relationship during this delicate stage.
You increase your chances of recovering your cash flow more quickly: by entrusting your unpaid invoices to a third party, you change your ‘gear’, your client-debtor quickly understands that your partner will go all the way to obtain the payment due to you.
Vous optimisez vos frais de procédures judiciaires : les sociétés de recouvrement sont des clients habituels (voire très importants) des avocats et des huissiers :
- they know how to optimize them in time and cost,
- they also often benefit from privileged tariff conditions for all the services of lawyers and bailiffs (except for legal acts whose tariffs are regulated).
- they can often allow you to avoid billing for procedures that are not essential.
- Note: lawyers and bailiffs can either be service providers for collection companies or their direct competitors, but not both at the same time.

10- How to choose your collection agency: leave nothing to chance

For the recovery of your debts, the parameters that you must take into account are numerous (age of the debts, documents present in the file, nature and origin of the debtor, etc.) and cannot leave room for improvisation. Collection is a matter for specialists, the more specialized the service, the more effective it will be.

Ask the collection agency :

The legal and compulsory declaration of activity to the prefecture: the debt collection activity is regulated,
its professional liability insurance,
its bank guarantee for third-party funds

For an exhaustive view of the criteria that will allow you to assess the ability of a collection company to recover your unpaid debts, discover our article on how to choose your collection company without making mistakes .

If you are still hesitating to outsource, get in touch with a company that can offer you to test it on a short mission before committing yourself on the long term.

The final performance of collection will certainly depend on the quality of the files entrusted, but also and above all on the quality and relevance of the means implemented internally or given to the professional chosen to do his job.

Contact us to collect your unpaid invoices .