Question

List and briefly describe five strategies to manage outstanding accounts and debt collection.

Answer 1

Five strategies to manage outstanding accounts and debt collection are as follows:

1. Try sending invoices to clients on emails: This strategy says that if you send the invoices via email to your clients it saves a lot of time as compared to sending invoices through courier or other physical medium. Further you can also state in email that the payment has to be made on the day of receipt of mail only so as to ensure the collections are received in a timely manner.

2. If possible maintaining healthy relationships with your customers: Records reveals that the organization which maintains good relationship with their customers (say by interacting within some days with clients) has a higher chance of getting payment on a timely basis.

3. Offering multiple payment terms for payment of bills or invoices: Organizations that give their customers a flexibility of making payment via different payment terms such as debit card/ credit card/ paypal or other payment mechanisms have a higher probability of getting payments on time.

4. Deciding to whom the credit can be given: Without knowing the reputation of the customers to whom the credit is being given can put an organization on risk of receiving payments from such customers. In order to ensure that the customer past records are good, one can investigate it by checking CIBIL score or past payment history by discussing it with other sellers in the market or through some other medium also.

5. Taking help of consultancy firm: If organization is not able to decide on how to manage accounts receivables, then organization can decide to hire a consultancy firm having expertise in this particular department which can help to better manage your outstanding accounts and debt collection.

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