Purpose of the Policy
This policy provides guidelines for the collection of late payments from customers.
Procedures
An ageing debtor report is to be run every week. All overdue customer payments are to be noted and the following procedures undertaken until recovery of outstanding amounts.
First Contact: Once the payment is overdue, phone or email the customer. Remind them that payment is due and has not been received. Ask them when they will be paying and keep a record of the conversation or email. Remember to be nice, they may have forgotten or paid into the wrong bank account.
Overdue reminder: If they do not respond to the phone call or email, try contacting someone else in the business. Let them know who you are trying to contact. This often results in a return response from either the person you were trying to contact or someone else from the business. Make a note of all conversation details on the overdue customer payment record.
Final notice: When a payment is overdue for 60 days a final notice is to be sent either by phone or email. A record of this notice must be entered onto the overdue customer payment record
Direct contact: Where there has been no response to the final notice within 7 days then CFO must either visit the customer or phone where previous contact has been by email. The purpose of this step is to secure a date of payment. A record of this notice must be entered onto the overdue customer payment record.
Formal letter of demand: Where payment remains outstanding 90 days and there has been an unsatisfactory response from the customer, authorisation from CEO for the formal letter of demand to be issued must be obtained. Once authorised this letter is to be sent via registered mail and a record of this notice must be entered onto the overdue customer payment record.
Debt collection agency: Where the amount outstanding is in excess of $10000 and CEO has approved, a debt collection agency is to be appointed to recover the debt.
Write off debt: Customer payments that remain outstanding for 120 days are to be written off as bad debts and no further sales are to be undertaken with that customer without approval from CEO.