Amicable debt collection: what is it?
Amicable recovery generally occurs before the legal phase, constituting a less restrictive procedure where the creditor attempts to collaborate with the debtor to find a satisfactory solution. To effectively recover a debt, it must be well documented, of a precise amount and payable after the agreed deadline without exceeding the limitation period.
Receiving debt: a challenge for businesses
Paying bills and recovering unpaid debts represents a major challenge for businesses in many sectors, including housing, insurance, energy, and telecommunications. These sectors are particularly exposed due to their high transaction volume and the often recurring nature of payments:
- Time and resource management: In businesses, daily monitoring of receipts requires a significant allocation of time, human resources, and material resources. The steps of referencing expenses, tracking payments, and managing communications are often handled manually, making the process tedious and error-prone.
- Limitation of payment methods: Many businesses face limitations in the payment methods they accept, making it difficult to establish flexible payment schedules or automate retries in the event of failure. This inflexibility can exacerbate payment delays and lead to debt collection obligations.
- High management costs: Manually managing customer relationships related to invoice settlement and tracking payments increases operational costs. For companies issuing a large number of invoices, reducing Days Sales Outstanding (DSO) is essential for cash flow, but remains a costly challenge.
- Bank reconciliation challenges: The diversity of payment channels (online payments, email, SMS, etc.) complicates the reconciliation of banking transactions. Payments that are not referenced or contain errors are difficult to process and can slow down the recovery process.
Amicable debt collection: a simple and effective solution
To overcome these challenges, it is important for companies to modernize and automate their debt collection processes. Adopting digital solutions for invoice and reminder management can not only improve collection efficiency and reduce associated costs, but also preserve good customer relationships.
Amicable debt collection offers several advantages: it is cost-effective, limits legal costs and delays, and preserves business relationships, essential for future collaborations. Furthermore, this method offers a certain flexibility, allowing you to negotiate payment plans that respect the debtor’s repayment capacity (split payments, initiated transfers, etc.).
Amicable debt recovery: how to optimize it ?
The debt collection process is not a pleasant one for anyone. Therefore, by improving their out-of-court debt collection process, companies maximize their resources (time, money, and human resources).
Key steps
A complete out-of-court debt collection procedure requires several steps:
- Pre-due date notification: Send a courteous reminder to the customer a few days before the due date to warn of potential late payment.
- Reminder email: After the due date has passed, it is advisable to send an initial reminder email with a payment link, followed by a second one if the first one remains unanswered. These reminders should be worded politely but firmly.
- Phone Call: If emails aren’t enough, a phone call can help clarify the reasons for the late payment, whether it’s temporary issues or a dispute over the invoice. This exchange can also pave the way for appropriate solutions, such as establishing a payment schedule.
- Regular Mail: To reinforce the message, a letter can be sent. This marks a step toward formalizing the payment request.
If all amicable attempts fail, a formal notice letter, sent by registered mail with acknowledgment of receipt, must be sent. This letter prepares the ground for possible legal action.
Automate your amicable debt collection procedure with CentralPay
Automating amicable debt collection has become an essential element in reducing manual administrative processes. By digitizing invoice processing, companies can reduce their operational costs by 25 to 50% compared to manual processing, while improving the efficiency and speed of collections.
Smart Collection features
The Smart Collection solution automates customer relations related to invoice payment and debt collection, limits collection constraints, and facilitates the payment process for customers, without dehumanizing customer contact.
- Payment links associated with invoices and reminders: You integrate detailed payment links into your invoices and customer communications (email, SMS, QR code on letters, etc.), ensuring ease of use and high payment rates.
- Send bulk payment requests: By importing an invoice file, you can send payment requests to multiple recipients simultaneously, significantly streamlining the process for high transaction volumes.
- Flexible payment methods: You offer your customers the freedom to pay their invoices by card, bank transfer, direct debit, in installments, or with multiple cards, thus increasing the chances of on-time payments.
- Communication automation: Email and SMS templates can be prepared with scheduled sending and reminder scenarios to maintain consistent and efficient communication.
- Automated reconciliation: You generate virtual IBANs, which you associate with your customers, invoices, points of sale, etc. This automatically identifies the sender of each transfer received, even in the event of an error in the reference or amount, and updates your financial software in real time.
Strategic integration
CentralPay doesn’t just facilitate payments; it also integrates these processes into your ERP or management tool, taking invoice payment automation even further. CentralPay also provides you with monthly financial reports and comprehensive accounting exports, allowing you to accurately track and analyze your cash flow.
