Debt collection is a difficult task for anyone. Debt collection software helps to transform your monthly 3-day ‘update the spreadsheet, and then try to contact everyone’ collections trauma into an effective, instant and reliable method for managing your debt recovery.
With collection software in place, you get to keep better, more accurate records. You’ll also improve communication between yourself, your admin team, and your customers, which in turn breeds loyalty and encourages repeat business.
Debt collection software manages your entire debt collection process. It starts with your database and a list of overdue invoices. The software matches money coming into those invoices and if an invoice remains unpaid for a specified amount of time, the ‘debt collection’ process begins.
What exactly is the debt collection process?
The best way to avoid bad debts in your practice is to stick to a simple yet fundamental collections process. If you are wondering “How do I set up an effective collections process”. We can help. In our experience with healthcare practitioners over the past 8 years, we have identified the following 3 key elements.
A Good Quality Billing Software, Ready for Analysis and Report Generation.
You know the age-old saying “Rubbish in, rubbish out”. You will only be able to have a good understanding of your practice’s financial position if the information you are receiving is accurate and complete. This means that good billing software is an essential part of your collections process.
You need to be able to generate at least the following reports.
- Who has been invoiced and when
- Age Analysis: How much debt is outstanding and how long the debt has been outstanding for (This will help you to determine what percentage of debt may be unrecoverable)
Access to the Right Payment Reminder Tools.
Having the right tool for the job does go a long way. When trying to remind people to pay their accounts on time. A subtle reminder sent through a variety of convenient channels makes a world of difference to your collections process. Especially if you can automate those channels.
Emails, SMS/text, and even voice messages can be set up automatically to send payment reminders to clients. These notifications can be scheduled to be sent out at predefined intervals, based on your terms and conditions. Another benefit to automating these reminders is that it removes one more item from your to-do list.
Having a Clear Invoice that Highlights Payment Due Dates and Methods of Payment.
We have all at some point received an invoice where the only clear thing is that we owe money. We are not entirely sure how much is owed when it’s due or even how to pay it.
Don’t be that company.
If it’s hard work for your client to pay you, likely, they won’t. Make sure your invoices are well laid out, clear, and easy to read. Your invoice should include all of the following:
- Itemised billing with a short and simple description next to each item so it’s clear what your client is paying for and how much each item costs
- A very clear grand total at the bottom of the invoice.
- Various payment methods with detailed descriptions of what is required for each. For example, if paying by EFT, include what payment reference to use.
- A statement that gives an overview on an account’s history and ageing. It shows the total balance outstanding, recent invoices, payments and other financial transactions. Inclusion of this information helps customers manage their payments accordingly.
Each of these elements should be considered as part of the overall collections process to help reduce the practice’s bad debt.
Show me the money.
The three key elements we mentioned above will assist you with the debt collections process for your practice. The exact steps in the next section of your collections process could vary but should look something like this.
- Send the invoice :: Send your invoices out on time and consistently.
- 10 Days after the due date :: Email reminder with a copy of the invoice/statement.
- 30 Days after the due date :: 1st overdue notice email and sms.
- 45 Days after the due date :: 2nd overdue notice email and sms.
- 60 Days after the due date :: Final or strong notice email and sms.
- 10 Days later :: A Section 129 letter should be sent via registered post.
- Services are suspended until payment is made.
Imagine how much easier your life would be if all of that happened automatically?
Reasons you should use debt collection software.
Using software like IsoDebt ensures that your unpaid accounts are managed effectively and consistently. Consistency maintains your message and your clients need a predictable flow of information from you.
2:: Instant, Accurate Data.
With automated debt recovery software, the data in front of you is real-time and accurate. Guaranteed. No double-checking required, just reliable information you can count on.
3:: Automation of Manual Tasks.
The best part about the software is its ability to automate manual tasks and processes. Smaller repetitive tasks are taken care of automatically and you are notified as soon as an intervention or approval is required.
4:: Multiple Communication Channels.
By using multiple communication channels you can send notices to a debtor via email, SMS, or WhatsApp. This means that your notices are being sent on three of the most popular communication channels.
The goal at the end of the day is successful debt recovery, and debt collection software goes a long way to ensuring reliable, accurate processes and reduced revenue leakage. Cash is king and every business needs a stable cash flow to succeed. If your practice is bleeding cash due to bad debts not being recovered then you need to consider debt collection software.
For more information on our IsoDebt Software please click here