Pre-Suit Collection Strategies

Understand how to perform the necessary initial steps when credit is extended in order to increase the likelihood of successful collections later.

Many companies extend credit to their customers or other companies with whom they do business without an organized plan for collecting on the indebtedness if the debtor fails to pay as agreed. Other companies recognize the possibility of default, but find themselves ill equipped to collect the debt when the default occurs, because of a failure to take the correct steps when the credit was extended. This topic helps creditors to understand first how to perform the necessary initial steps when credit is extended in order to increase the likelihood of successful collections later. The topic then explains to creditors how to establish a collections plan, should problems arise with payment. This topic also gives practical tips of how to keep your collection costs low, so as not to further compound your overall loss. Failing to consider how your company will approach collections results in a loss of collections and increased out-of-pocket costs at the time of default. This information helps lenders ensure that they have devised the most efficient collections plan appropriate for their businesses.