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What are Collections?

Collections refer to the process of tracking and collecting outstanding payments from customers. This includes:
  • Payment Tracking: Monitor which invoices are paid, pending, or overdue
  • Reminder Management: Send automated payment reminders to customers
  • Overdue Management: Handle late payments and collection strategies
  • Cash Flow Optimization: Improve payment collection efficiency
  • Customer Communication: Maintain professional relationships during collection
Effective collections management is crucial for maintaining healthy cash flow and reducing bad debt in your business.

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Collections Dashboard

1

Access Collections

Navigate to Collections in the Devdraft Console.
You’ll see an overview of your outstanding payments and collection metrics.
2

Review Outstanding Balances

View all unpaid invoices and their status:
  • Current: Invoices not yet due
  • Overdue: Past due invoices
  • Severely Overdue: Long-term outstanding balances
  • Disputed: Invoices under customer dispute
3

Monitor Collection Metrics

Track key performance indicators:
  • Days Sales Outstanding (DSO)
  • Collection Rate
  • Overdue Percentage
  • Average Payment Time
  • Total Outstanding Amount
Collections management interface with outstanding balances

Collections dashboard showing outstanding payments and collection metrics

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Outstanding Payment Management

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Payment Aging

Payment Aging Categories

  • Current (0-30 days): Invoices not yet due
  • 30-60 days: Recently overdue invoices
  • 60-90 days: Moderately overdue invoices
  • 90+ days: Severely overdue invoices
  • Disputed: Invoices under customer dispute

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Collection Actions

1

Review Outstanding Invoices

Examine each overdue invoice:
  • Check payment terms and due dates
  • Review customer payment history
  • Assess collection priority
  • Identify potential issues
2

Send Payment Reminders

Automate reminder communications:
  • Friendly Reminders: Gentle payment reminders
  • Overdue Notices: Formal overdue notifications
  • Final Notices: Last-chance payment requests
  • Collection Letters: Formal collection communications
3

Follow Up with Customers

Personal communication for overdue accounts:
  • Phone calls to discuss payment
  • Email follow-ups with payment options
  • Payment plan negotiations
  • Dispute resolution

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Automated Collection Workflows

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Reminder Scheduling

Automated Reminders

  • Pre-due Reminders: Sent before invoice due date
  • Overdue Notices: Sent immediately after due date
  • Follow-up Reminders: Sent at 15, 30, 45, and 60 days
  • Final Notices: Sent at 90 days overdue
  • Collection Letters: Sent for severely overdue accounts

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Communication Templates

1

Create Reminder Templates

Design professional reminder messages:
  • Friendly Tone: Maintain customer relationships
  • Clear Information: Include invoice details and payment options
  • Professional Formatting: Use consistent branding
  • Call to Action: Clear next steps for customers
2

Customize by Customer Type

Tailor communications:
  • New Customers: More detailed payment instructions
  • Regular Customers: Brief, familiar reminders
  • Large Accounts: Personalized communication
  • Problem Accounts: More frequent follow-up

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Collection Strategies

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Customer Segmentation

Customer Types

  • Prompt Payers: Pay on time consistently
  • Occasionally Late: Sometimes need reminders
  • Frequent Late Payers: Often need collection efforts
  • Problem Accounts: Require special attention

Collection Approaches

  • Friendly Reminders: For occasional late payers
  • Firm Follow-up: For frequent late payers
  • Payment Plans: For customers with cash flow issues
  • Legal Action: For severely overdue accounts

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Payment Plan Management

1

Assess Customer Situation

Understand why payment is overdue:
  • Temporary cash flow issues
  • Dispute over services/products
  • Customer dissatisfaction
  • Financial difficulties
2

Propose Payment Plans

Offer flexible payment options:
  • Installment Plans: Break large balances into smaller payments
  • Extended Terms: Give additional time to pay
  • Partial Payments: Accept partial payments over time
  • Discounts: Offer discounts for prompt payment
3

Monitor Payment Plans

Track payment plan compliance:
  • Monitor scheduled payments
  • Follow up on missed payments
  • Adjust plans if needed
  • Celebrate successful completions

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Collection Analytics

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Performance Metrics

Key Collection Metrics

  • Days Sales Outstanding (DSO): Average time to collect payment
  • Collection Rate: Percentage of invoices collected
  • Overdue Percentage: Portion of receivables that are overdue
  • Collection Efficiency: Success rate of collection efforts
  • Bad Debt Ratio: Percentage of uncollectible receivables

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Collection Reports

Aging Reports

  • Accounts Receivable Aging: Outstanding balances by age
  • Customer Aging: Outstanding balances by customer
  • Collection Aging: Collection efforts by time period
  • Payment Trend Analysis: Payment patterns over time

Performance Reports

  • Collection Team Performance: Individual collector metrics
  • Reminder Effectiveness: Success rates of different reminder types
  • Customer Payment Behavior: Payment patterns by customer segment
  • Cash Flow Projections: Expected cash flow based on collections

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Best Practices

Collection Best Practices

  • Early Intervention: Start collection efforts before invoices become severely overdue
  • Professional Communication: Maintain professional tone in all communications
  • Document Everything: Keep detailed records of all collection activities
  • Be Flexible: Offer payment plans and options when appropriate
  • Know Your Customers: Understand customer payment patterns and preferences
  • Use Automation: Leverage automated reminders to save time
  • Follow Up Consistently: Maintain regular follow-up schedules
  • Escalate Appropriately: Know when to escalate to more formal collection methods

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Collection Laws

Ensure your collection practices comply with local and national collection laws and regulations.

Legal Considerations

  • Fair Debt Collection Practices Act (FDCPA): U.S. collection law compliance
  • Local Regulations: State and local collection laws
  • Communication Restrictions: Limits on when and how you can contact customers
  • Documentation Requirements: Required records and disclosures

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Dispute Resolution

1

Handle Disputes Promptly

Address customer disputes quickly:
  • Acknowledge the dispute immediately
  • Investigate the issue thoroughly
  • Communicate findings to customer
  • Resolve disputes fairly and promptly
2

Document Dispute Resolution

Maintain detailed records:
  • Dispute details and timeline
  • Investigation findings
  • Resolution agreements
  • Follow-up actions

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Use Cases

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Small Business Collections

Small Business

  • Personal Touch: Direct customer relationships
  • Flexible Terms: Ability to offer payment plans
  • Quick Response: Fast dispute resolution
  • Local Knowledge: Understanding of local market conditions

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Enterprise Collections

Enterprise

  • Automated Systems: Large-scale collection automation
  • Dedicated Teams: Specialized collection staff
  • Legal Support: Access to legal collection resources
  • Advanced Analytics: Sophisticated collection analytics

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Service Industry Collections

Service Industry

  • Project-Based: Collections tied to project completion
  • Milestone Payments: Collections at project milestones
  • Retention Rights: Ability to withhold deliverables
  • Service Disputes: Handling service quality disputes

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Troubleshooting

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Next Steps

Explore these related topics to enhance your collection process:

Invoices

Create and manage invoices for your customers.

Transactions

Monitor payments and track collection success.