Experience is often the best teacher. When working with clients, I find that the most appreciated lesson I can deliver is showing how to determine when to deem an account delinquent.

Too often, businesses start thinking "delinquent" 5 to 15 days past due. Yet, most credit managers admit that they can suspect who will be past due.

Thus, it only seems logical to suggest that chronic abusers should be identified and isolated at the time credit is granted again -- when the next order is received. This is when the collection process should begin. Here's how:

• Upon receipt of the order, place a call to remind the customer of your terms and ask if these terms will present a problem.
• Upon shipment, place another call to let the customer know that the invoice is on the way, and emphasize the due date.
• A third call, to verify the receipt of the goods and invoice might also be appropriate.
• Finally, place another call five days before the invoice due date and ask the customer "Are you thinking about the money that is due next week?"

Once you deem an account to be past due, or even suspect that it will be past due, begin collections activity immediately.

• Select a date beyond which you will no longer work with the account for collection on your own. (It has been my experience that any collection effort extending beyond 45 days from the date you initiate recovery efforts will be wasteful.)
• Make four or five contacts on your own, up until the date you have selected. These contacts should follow a series of clear steps that you have determined in advance. These steps, taken in sequence, represent a firm, relentless, professionally executed path toward internal recovery.
• If the account is not paid by the date you have selected, seek third party assistance. A good third party collector can be an adjunct that enhances you and your business. There is no stigma in using this service as long as the collector you choose acts professionally. In addition, handing the account to a third party collector leaves you time to begin working on newly delinquent accounts or generating new business.