Benefits of Having Debt Collection Software
A common problem that businesses have is managing their debt collections. Unpaid invoices account for $26 billion dollars in Australia. This can have a serious impact on your business’s cash flow, thankfully, debt collection software is designed to help you effectively manage your debt collection and recovery.
To put it simply, debt collection software automates the entire collections process, from sending the invoice, to sending out reminders and warnings. Many products on the market will also provide notifications if manual assistance is required.
How do small businesses traditionally recover debt?
Australian Securities and Investment Commission (ASIC) recommend several steps to debt recovery:
- Check contract terms to see when payments were due
- Contact the customer in writing to request payment
- Keep records of all customer correspondence
- Set up regular payment reminders
- Send a formal letter of demand
- Consider hiring a debt collector if the customer still won’t pay
- Consider taking legal action
How does debt collection software help?
Debt collection software can efficiently automate the first five steps and provides the information necessary to consider steps six and seven.
Once set up, this software will evaluate your database of accounts and send invoices before payment is due. This often occurs three weeks prior to the due date, however, you can tailor the message and time between communications to suit your business.
This customisation allows you to create a tiered communication structure for different levels of payment requests and demands across multiple touchpoints, all from one platform.
- Send Invoice, 3 weeks prior to due date
- SMS a reminder, 1 week after due date
- Email a formal request for payment, 15 days after due date
- Send a formal written warning, 25 days after due date
- Email informing of suspension of account or warning of legal action, 30 days after due date
If customisation sounds too daunting, or just too much time, don’t worry!
Most software available will provide SMS and email templates for a variety of different situations.
A benefit as a result of automation is the digital information recorded. This refers to all the data saved throughout the collections process, including basic information such as customer correspondence and more in-depth analysis reports.
Managing workload is a struggle in all businesses, that is why receiving immediate and accurate data is necessary in order to prioritise actions based off which accounts are more valuable and which accounts require immediate attention.
Storing this data allows the software to create effective customer reports ready for analysis, to assist in decision making for your business. Reports can often be focused to highlight different periods, typically 30 and 90+ days.
This can streamline and provide an advantage when making decisions, for example, whether to continue trade with a customer or deciding whether legal action is worth the costs involved.
If legal action is taken, customer correspondence records and additional data can be effective evidence.
A report of customer performance can help identify late payment trends, allowing you to plan and implement measures to minimise overdue invoices and maximise cash flow.
Implementing debt collection software can stop you from chasing debt and help you maximise your cash flow. For help integrating debt collection software, or information on what software is available, get in contact with the team on 1800 560 690 or here, and ask us about 365 Collect!