Common Credit mistakes

If you are new to credit policies you may not be familiar with some common mistakes made when collecting on past due accounts.  Make sure you don’t make these mistakes:

•    Not checking customers credit history before extending credit
•    Not getting a signed credit application, agreement or contract
•    Not being familiar with the FDCPA and unintentionally “harassing” a debtor
•    Overlooking small balances
•    Not asking for the money because you hate asking for your money
•    Not knowing when is the right time to turn the account over to a collection    agency

•    Not having any type of credit policy and enforcing it
•    Extending credit to anyone who walks in or calls because they “sound like   they will pay”

•    Not taking action on returned checks
•    Not using letters and forms to collect on past due accounts
•    Not having a credit application
•    Not checking credit
•    Not understanding how to communicate with customers so they stay      current

•    Not using discounts and incentives to persuade customers to pay early
•    Not knowing how to set up realistic payment schedules with customers
•    Not knowing what to do if a customer files for bankruptcy
•    Not training collection staff
•    Waiting to long to use a collection agency

What if you have already made some of these mistakes? There are things you can do to correct the most common debt collection mistakes.

•    Enforce your credit policy – it’s never to late, start today
•    Make sure your debtor is “worth” something before suing them, if they don’t have any assets or a job or bank account, there is nothing to attach or garnish if they do not pay.

•    Ask for payment immediately when payment is due
•    Research and sign up with a debt collection agency even before you need one and then place accounts before they get to old.

Always check credit references. If something doesn’t seem right, it’s probably not.  If you are not happy with the references provided to you, ask for additional references.  This customer wants credit from you, so you call the shots.  If you give them credit without checking them out, they call the shots.  

Bio

Michelle Dunn is an award winning author and columnist frequently featured in the Wall Street Journal, CNN and Forbes. Look for her newest book being released in May by Wiley Publishing titled, "The Guide to Getting Paid, weed out bad paying customers, collect on past due balances and avoid bad debt, available for pre-order now on Amazon.