Improving your cash flow and understanding how debt collections fit into your business should be an important part of how you operate in 2022. If you continue to struggle with customers not paying you and you feel you have an ongoing need for debt collections, you’ll want to consider how collection activity around your accounts receivable process will fit into the coming year.
This past year has seen numerous changes for businesses. From a change in customer behavior, the way we work as a result of the pandemic as well as fluid changes in regulations posed on businesses, it’s always a good idea to stay up to date on how to keep cash flow positive, keep your customers happy and thrive in the coming year.
Here are a few important things to be aware of as you usher in a new year.
New regulations for debt collections
The first and probably the most important factor you should be aware of is that the debt collection industry has seen new regulations implemented at the end of 2021. These regulations are called Reg F and have been implemented by the CFPB which has provided guidelines to those in the collection industry for several years. While these new guidelines are specifically for debt collectors, you should be aware that these regulations have been enacted. Reg F outlines new parameters on how debt collectors can communicate with a consumer, the steps that should be taken in validating a debt as well as what needs to take place before a collection agency reports a consumer to a credit reporting bureau. This is the responsibility of the collection agency, but you should know because you may be asked for additional information before sending a customer into collection activity.
Improve your record-keeping
As you enter a new year, it’s always a good time to review all your accounts receivables, your accounting methods, as well as the way you keep records and documents. What helps a collection agency produce far better results for your business is when you have kept the proper records. That includes all the dates of service for your customer, invoicing and statement dates as well as detailed records about your follow-up activity on unpaid invoices. Once again because of new regulations ushered in for 2022, you may be asked for additional information and documentation when sending a customer into collections. Take the time now to review all your record-keeping around invoicing and your accounts receivables.
Improve your follow up procedures on invoices
We always advise businesses of all sizes to implement a series of follow-up communications when customers do not pay. That can be in the form of statements mailed or emailed to the customer and then a number of phone calls to try and get your customer to pay. Because many people are now working remotely and at home during the day, it makes perfect sense to conduct gentle reminders by phone during business hours. Be careful not to harass your customers by calling every day. A good guideline to follow is to contact them once a week to remind them that payment has not been received. And always be cordial when speaking to your customer or leaving a voicemail.
Being nice in your collection efforts
We just mentioned being cordial and having a friendly tone when you’re following up with your customers. It’s vitally important that you and your staff remember this each and every time you contact a customer about an unpaid bill. Being nice will eventually produce results. Being angry and upset with your customer when they do not pay will only backfire and will further delay any type of payment. Our professional collectors always listen and seek to understand a consumer situation before discussing any type of resolution. And you should do the same. Also understand that if you have treated your customer properly and with respect when you do need to send them to a collection agency, that treatment will go a long way in paving the road for a resolution.
Protect your business by using a collection agency
Because there are a whole host of regulations and laws on the books that protect consumers, it’s always a good idea to use the services of a reputable collection agency. Laws are not just federal, there are also individual state laws that your organization needs to be aware of. This was never more evident than during the COVID-19 pandemic where we saw varying degrees of regulations implemented on the state level. And they continue to evolve. Because a collection agency will stay up to date on these regulations, it goes a long way in protecting your business. Collection agencies need to follow these laws and by doing so, offer your organization additional protection.
If your organization is looking to improve cash flow in 2022, contact our team today and book a free consultation with our collection experts.