While talking about delinquency, we got an interesting insight from one of our readers, which we shared last time
Setting up critical follow up levels for a collections process
Once we have defined and setup the norms which cover what delinquency in a collections process is, the next step is to define the critical follow up levels. Now, as the term suggests, critical is a key word. But before we reach there, we need to set up follow up levels.
A standard structure for any client will consist of a soft follow up just before an amount becomes due, followed up with a gentle reminder in month one, supported by phone calls and visits as time passes, and probably after 90 or 180 days, considering legal reminders and action for collecting the overdues.
The frequency and nature will again vary from client to client / business to business. Market dynamics will be important again. Again, there is no thumb rule for this, however, each business category does have some standard best practices which form a guidance for the collections department.
Another important thing, this activity is usually not outsourced. It is core to your client’s decision making. Where you can chip in is primarily in sharing the best practices that you may have seen / deployed for other clients, similar or disperse.
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