Chat with us, powered by LiveChat

Steps to maximize your collection

The business world today requires us to maximize collection efforts and to make more profitable decisions. On the one hand, a company’s resources are limited and on the other, those having cash-flow problems are financed by their transportation providers, resulting in a number of customers falling into delinquency.

In order to optimize your decision-making it is important to identify and include your customer’s debt portfolio in your business plan. Overall, delinquent customers should be classified into three segments: the regular defaulter, those with financial stress and those with an unplanned event.

At this time I would like to focus on the second type, the slow-paying clients under financial stress. To maximize your collection efforts, it is necessary to give priority to customers who show financial stress. Acting promptly with this client group can be extremely beneficial to your company, as it will reduce the likelihood that these customers fall into severe maturity or worse. The greatest threat in this case is that your client will fall into a state of insolvency and generally, clients with financial stress are more likely to fall into that category if action isn’t taken immediately. Typically the accounts that are more than 60 days past due are still are being managed internally, instead of being placed with a collection agency for their prompt recovery.

Identify the reason for the delinquency and pay close attention to the trend of your delinquent customers. Most customers, when in arrears, pay when reminded of their default. However, if your client is already more than 45 days past due and has not offered any solid payment solution, evaluating them for financial stress is necessary.

In order to identify those clients with financial stress, analytical models showing the trend of the behavior of each delinquent payment should be utilized. These models will help you to predict whether or not an account will fall into serious maturity (greater than 60 days).

If the trend indicates the customer will fall into the 60 days past-due category or they are already identified as being delinquent with financial stress, action should be taken immediately by assigning the account receivable to a collection agency. Doing so not only minimizes the risk but increases the likelihood of recovery before the customer becomes insolvent.

Salvador Bañuelos

Sal is known internationally for the debt collection results he has provided to the freight transportation and import/export industries worldwide for the last 15 years. Author of "Credit and Collections in the Freight Industry Handbook" & "Credit & Collections Policy – Practical Guide”. He contributes to the industry with articles in the following leading magazines: T21 and Enfasis Logistica Contact him:  E-mail ,  Twitter ,  facebook,

AFS InternationalHQ - San Diego, CA.
16 years accelerating our clients cash flow.
Our officesWhere to find us?
Get in touchSocial networks
AFS InternationalMatriz
Nuestras oficinas¿Dónde encontrarnos?
Pongase en contactoRedes Sociales

Copyright © 2020 AFS International, LLC.  All rights reserved.

Copyright © 2020 AFS International, LLC. All rights reserved.