It’s one of the foundations of every healthy business: regular, timely payments from customers help maintain steady cash flow. Unfortunately, you’ll inevitably be faced with customers’ occasional delinquent payments, a stressful situation that puts a burden on every department of the business.
Member and Non-Member Suppliers alike look to JBT’s debt collection service to transform bad debt into positive cash flow. Here’s why:
- JBT’s long-standing industry relationships lead to better outcomes than general collection agencies.
- JBT collections offer unique leverage tools to impact the success of the collection effort: claims appear directly on the debtors JBT credit report and are published in the weekly New Claims & Bankruptcy report for all subscribers to see.
- You benefit from competitive collection fees - As a not-for-profit organization, JBT's collection rates for Members are up to 50% off market rates
- JBT offers a 15-day Free Demand period where there is no charge if the debt is collected during that time.
- You stay in the know with 24/7 real-time access to your claim status through the JBT Members’ Only website.
Curious to learn more about debt collection best practices? Read on for answers to frequently asked questions, or contact us to discuss your unique situation.
Q: Does the age of a claim matter to the outcome?
Yes. The probability of collecting a delinquent account drops dramatically with the length of delinquency. For example, after only 3 months, the probability of collecting a delinquent account drops to 68.9%. After 6 months, the probability of collecting drops to 51.3%. After 1 year, the chance of ever collecting on a past-due account is a dismal 8.9% (Collectability statistics from the Commercial Collections Agencies of America).
Q: Is it okay to extend payment terms?
The jewelry industry offers a variety of terms, so be cautious which customers are allowed to have extended terms. Too many will not only endanger your company's cash flow but also lead to undesirable precedents as well.
Q: When should I place an account with a collection agency?
Assuming you’ve already sent out several statements, collection letters, and calls pertaining to the customer’s payment delinquency, it’s advised to place the account with a certified collection agency if payment hasn’t been received within 120 days (90 days after the invoice due date).
Q: Why is it so important to perform front-end diligence?
Getting a customer to pay within terms begins long before the collection process; it starts when you make the deal to sell. Investing the time upfront to do your due diligence in the credit assessment process and provide clear documentation of terms of sale and payment will prevent confusion if a payment problem arises.
We suggest these steps from the get-go to reduce the likelihood of payment issues:
- Require a credit application signed by a principal of the company
- Pull a credit report
- Assess risk
- Establish clear payment terms
- Clarify with a follow-up call
- Request updated credit applications periodically
Knowing when to shut off a customer can depend on many factors, but communication is key. You must reassess your strategy if the customer has made a few promises and has not kept them. Don’t get caught in a cycle where your customer makes unrealistic promises to pay, continually pushing out payments further and further.
Even your best customer has a slow month once in a while. But, when it comes time to take action on missed payments, consider speaking with JBT to discuss your options.
While JBT’s collection services are not exclusive to only members, joining JBT’s membership program provides you access to substantially lower rates and many other benefits. Apply for a JBT membership today!