Collection rule: what is it, its importance, and how to implement it?

Keeping customer payments up to date is essential for quality financial management.

In this sense, one of the most important aspects is to correctly deal with delinquency, which can be done with the help of the collection rule.

Through this strategy, it is possible to automate tasks, improve contacts and increase the chance of credit recovery.

And it can be useful for companies of all sizes. Therefore, it is essential to carry out the implementation properly.

Next, see what the billing rule is and understand how to put it into practice in your business! Come on?

What is the billing rule?

The collection rule is a set of strategies for contacting the public as a way of avoiding or reversing default. Thus, its main objective is credit recovery.

It can be used in businesses of all types and sizes. In particular, those whose cash flow has a strong reliance on accounts receivable.

How does the billing rule work?

One of the main features of the billing ruler is the fact that it is unique for each business.

Therefore, the tool depends on your audience, the payment behavior of customers and the general needs of the company.

However, certain points work in a common way for all applicable billing rules. In this sense, it is often organized as a timeline.

At each point, the moments to contact the customer and charge a certain amount are indicated.

It is possible to establish, for example, the need to contact 1, 3 and 5 days late, initially. The idea is to prevent the debt from becoming more distant, which tends to make payments more difficult.

The billing ruler can also predict the contact 1 day before the due date and on the date. Thus, it is possible to act proactively so that the delay does not even occur.

The strategy must also establish the contact channels, the messages sent and their contents.

After all, making a payment reminder is different from making a late charge, for example.

What are the types of billing rule?

Although the billing rule works in a common way, there are different types depending on the proposed approach.

This is the case with rules that vary according to the type of payment, such as bank slip, transfer or credit card .

It may make sense to send the ticket again on the eve of the expiration date or warn about the need to check the card limit before the amount is billed, for example.

There is also a collection rule that works in a preventive manner and not only with a focus on recovery.

In this case, the intention is to avoid delay, which can happen by the mere forgetfulness of the customer.

What are the benefits of this tool?

Now that you know how the collection rule works, it is worth understanding that it also has benefits for micro, small and medium-sized companies.

This is not an exclusive feature of big business and, when properly applied, it is capable of offering results for everyone.

The first positive point is credit recovery. That amount that did not enter the cash, therefore, becomes available.

This is because the billing rule reduces the level of bad debt.

The more efficient the use of this tool, the better the recovery of resources tends to be. A good billing rule also serves to optimize processes.

Everything happens more efficiently, with a higher success rate and greater use of efforts.

In practice, the adoption of this resource strengthens financial management and can favor the execution of strategic planning.

For small businesses, this is especially relevant as it enhances overall competitiveness.

How to create and implement a billing ruler?

To make this collection system really efficient for your business, it is essential to take care of all the steps until its implementation.

So, here are the essential steps to consider!

Make a business diagnosis

It all starts with a process mapping and identification of critical points.

You need to understand your company’s financial structure and how customers make (or don’t) make payments.

A small company has an advantage in this regard because it is easier to identify and follow the steps in the collection sector.

Define contact characteristics

Afterward, it is necessary to establish what measures will be taken to define the charge. In certain cases, it may be interesting to send three types of contact:

  • before expiration;
  • on the due date;
  • after expiration.

In other situations, it may be more interesting to send more contacts before maturity, as a way to reduce the risk of default.

So when creating the billing rule, it is necessary to establish criteria such as:

  • number of contacts made;
  • date of making the contacts;
  • chosen medium (e.g. via phone, email or multiple contact locations).

After expiration, the collection rule can provide for more frequent contacts, specific settlement proposals or even the title protest.

Consider using technology

To make the ruler more efficient, it may be interesting to adopt a charging system.

Through technology, it is possible to execute most processes in an automated way, which reduces costs and the risk of errors.

An automated billing ruler is also useful to prevent the team from getting stuck in repetitive tasks.

Thus, there is more time available to plan contacts toward credit recovery.

Follow the results

Implementing the billing rule is not the final step. It is essential to monitor the results to know what has been efficient and what can still be optimized.

Depending on the case, it may make sense to change the means of interaction, intensify the approach or change the frequency of contact.

Through indicators, such as the volume of credit recovered in the period, it is possible to obtain insights to optimize your approach.

Thus, decisions can be made that improve the financial management of the business over time.


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