Best Practices for B2B Collections

March 6, 2019
Business to business collections, or B2B collections, can be a long and frustrating process if you aren’t sure what you’re doing. From maintaining a positive customer relationship to collecting as much as possible under difficult financial circumstances, B2B collections is best undertaken by a professional.

Preserve Your Business Relationship

Unlike business to consumer (BTC) transactions, B2B transactions often involve an enduring relationship or partnership. Because it can take months or years to build strong business relationships, many businesses are hesitant to engage in harsh B2B collections tactics for a single overdue invoice and throw away those years of positive collaboration. When a business is late on a payment, and a traditional past due notice fails to get any response, always start by contacting the client. There are cases where a payment fell through the cracks, a letter was never received or the person responsible for writing checks was on leave. Contacting the client first lets them know you want to both collect the money you are owed and offer them a chance to explain what happened before jumping to conclusions.

Establish a Billing Policy

Companies have different policies as to how many invoices they will send out before forwarding accounts to collections. Some will send only two invoices, others three or even four. Since invoices usually have a 30-day payment window, the time frame for turning accounts over to collections can be anywhere from 60-120 days from date of sale or service.  In healthcare, this time frame is commonly 120-180 days from date of service, if a bill is first run through insurance. Your billing policy should also include how many phone calls and email reminders you want sent out to overdue clients, as well as who is responsible for these and when action needs to be taken. For instance, you could specify that seven days before a due date your accounts receivable team needs to send a reminder email. Three days before a due date you may want to make a phone call. When the last invoice in your series is sent out, it should include a note that, if payment is not received by the due date, the account may be turned over to a collection agency. Thirty days after that invoice is sent you should then promptly turn the account over to a collection agency.

Formal B2B Collections 

It’s best to use a professional collections agency because they understand the nuances of B2B collections and how to obey the letter of the law while attempting to collect. They have access to advanced technology, like skip tracing, which can track down debtors and businesses who may have skipped town. The laws governing business collections are different than those governing consumer collections, and numerous different tactics are available for use commercially that are not for personal debt. Always select an agency that is properly licensed and insured.

Don’t Wait Too Long

If you hear lengthy stories or feel like you’re being taken for a ride in response to your past due letter or demand letter, don’t wait too long to hire a professional collections agency. The longer that you wait to move forward with B2B collections, the lower your chances are of recovering a partial or full amount. Moving quickly is particularly important in cases where a business may be preparing to shut down or file for bankruptcy and time is of the essence.

Partner with Alacrity Collections, a Professional B2B Collections Agency

Alacrity Collections is proud to be a leader in commercial collections. We achieve great results that are over twice the national average and treat all of our customers with dignity and respect. We work tirelessly to protect your brand and improve your net returns. To learn more about our services and get in touch, please call us at 1-800-752-9663 or set up a phone appointment directly on our representative’s calendar via this link: www.calendly.com/hheemann.