There are three fundamentals for establishing controll over bad debt that are simple to follow:

  • Give a clear understanding of the terms of the credit transaction when initiated
  • Have a systematic and diligent follow-up of every account
  • Always have a periodic age analysis of every outstanding account

The first of these requirements, having a clear understanding of the payment terms, is the most neglected. This results in problems that are difficult and costly to overcome. When payment terms are not fully understood bad debt is incurred.

The second requirement, systematic follow-up, can be oral (in person or by Phone), or written. You, the creditor, must control oral communication. Written communication is more effective when brief and aimed at a single person.

The third requirement, age analysis, can be accomplished by using a simple form listing the name, amount owed and age of account (30 days, 60 days, 90 days, over 90 days).

Always insist on a firm payment arrangement up front, whether this is done orally or by mail, the arrangement must be specific.

It is important to identify bad debt early, thereby keeping those accounts to a minimum and having the best success of recovery.

To learn more about how BAC can help your business, please call us at 732.370.7047, or email us at