Every business no matter how big or small at some point has to contend with overdue or unpaid accounts. This is not to say that they don’t have a proven invoicing or follow up process. It is more a sign of the times.
The last few years have taught us that people and businesses do not have as much disposable income as they used to have. This has seen a steep rise in late payments on accounts and non-payment of bills.
As business owners, we do have to understand the economics of the time. However, we also have the fundamental right to collect funds that are due to us.
Why use debt collection software
The biggest question that we often get asked is how do we go about collecting funds without alienating our clients or ruining our client business relationships. The most effective way to collect these funds would be to have a debt collection software or accounting software. These have processes in place that will help you to follow up on overdue or delinquent accounts. We’ve seen many small businesses that use either Excel or Word as their accounting program. Struggle on a month to month basis to keep track of the accounts that are overdue. Some businesses have fantastic invoicing software which ensures that they know when their invoices have gone out. However every month they have to draw a report on their accounts ageing or overdue accounts.
Using Excel, Word or reports pulled from software is not the worst way to collect or follow up on overdue accounts but it is very time-consuming. If you are a small business, a one-man show or a business that doesn’t have a large administration team. You need to find ways of managing overdue accounts that are not time-consuming. And ensures that your team is able to follow up effectively and quickly on all accounts that are overdue.
Where debt collection software comes in.
This is where debt collection software does come in. With software, you are able to assign payment terms and assign messages that need to go out. As well as set rules as to what messages go to clients based on times and payment terms that you set. This saves your staff time and in the long run, saves you money. As you are able to chase up on an overdue account far sooner than if you took your once a month three day scour through excel spreadsheets process out of the equation.
This is not to say that every business requires debt collection software. What this article is about is to show that by having the use of debt collection software you can ensure that overdue accounts are collected a lot more efficiently. There is nothing wrong with collecting on overdue accounts yourself. And there’s nothing wrong with being a Jack of all trades when your business is starting out. However, as your unpaid book grows so does the amount of time needed to chase up on each account. And this is when you would start looking at if debt collection software makes sense for you and your business.
Benefits of Debt Collection Software
Some of the key benefits of debt collection software are that will make your unpaid process far smoother irrespective of how big or small your business is.
There is an entire industry built around debt recovery. Therefore an entire industry around debt recovery software and solutions. One of the biggest benefits of debt collection software is that it gives you a clear view of the status of your bad debt book.
1 :: Multiple forms of communication
This is a vital feature in any debt collection software. You need to have a system that allows you to use various communication methods. Email or SMS notifications, the possibility of WhatsApp notifications, and even E-statement functionalities. Each of these increases the probability that you can get communication with the debtor. Many businesses perform these actions outside of any billing or debt collection software. And this often results in disastrous consequences for the simple reason that you have no control over the communication that is being sent.
Remember the more actions performed outside of your debt collection software the more unreliable your data becomes.
2 :: Automated Reminders
The larger your bad debt book is, the more difficult it becomes to manage the volume of reminder messages that need to be sent. These reminder messages in my opinion are often the last line of defence between your debtor making a payment or not. When looking for debt collection software you want to make sure that the system can remind debtors when their payments are due, or notify the debtor when they have not honoured a payment agreement.
3 :: Bulk Actions
Another great feature that you want to look for when you are looking for debt collection software is does the software offer bulk actions?
Bulk actions are an amazing feature that allows you to create bulk documents or notifications. This allows you to contact a larger audience in a shorter period of time. Bulk actions allow you to create things like settlement campaigns or send notices out. With a single action to all accounts in a certain status. These bulk actions allow you to apply intuitive pacing concepts based on the availability of your staff etc.
4 :: Reporting
A really important feature to look for, especially with debt collection software, is reporting. Is the debt collection software you are using or looking to purchase able to give you a definitive report on the status of the accounts. Or dashboards that show you the status of your bad debt book at a glance? What is sitting in 30 days, 60 days, or 120 days? When was the last communication sent out? Are you running campaigns? Is it able to send financial reports to your accounting team for them to work on?
This kind of reporting ensures that you as the owner have your finger on the pulse and can see what is happening at any given time on your bad debt book.
5:: Integrity of Your Data.
Remember the more things happening outside of your debt collection software the more unstable your data is. Good debt recovery software will help to protect the integrity of your data. What this means is that your software should not allow staff to delete information or edit notes. There should be a very clear audit trail on everything that has happened within the software. Vitally important is everything that has happened on an overdue account.
What this does is, ensures the credibility of your data. Should the account be handed over for litigation, you can be assured that your data is credible. And have a full audit trail of absolutely everything, this is a really great way to ensure that everything is above board.
6:: Ease of Use.
The last thing you want is to have debt collection software that is difficult or too technical to use. Or where you’re going to have to send your staff for hours and hours of training. You want to have something that’s very quick to learn, fairly easy to navigate, and is able to adapt fairly quickly.
You don’t want to be sitting with something that’s difficult to use because the moment it’s difficult to use, what’s going to happen is your staff are going to go outside that system again which corrupts the integrity of the data.
There are a number of decent debt collection software and systems out there. We firmly believe that debt collection software, like billing or accounting software, is vital for a business. Do when looking for a debt collection system or software do your homework.
Remember that great debt collection software helps you to keep everything where it should be and gives you the business owner time to actually focus on what you do best, which is running your business. Having software means that you can also manage your workflow, you can see what your staff has been doing, have notices gone out, have follow-ups been done, and you are no longer reliant on word of mouth or corrupted data.
If you would like some additional information on our IsoEvolve Debt Collection software please click here