How Can I Encourage My Sales Team to Recover Overdue Client Payments Effectively?

Hi, I am looking to write an official documented letter to my salespeople, instructing them to recover overdue amounts from their clients. Any templates would be helpful.

The Importance of Recovering Overdue Amounts

We have salespeople who are bringing in clients and revenue but are not effectively recovering funds from their clients. What kind of letter or email can I send them to ensure they take the matter seriously and begin collecting outstanding amounts?

Dear Tariq,

Those who have rubbed shoulders with salespersons know the adage, "It is easy to sell but difficult to recover." To meet the sales target, salespersons are tempted to do credit sales. However, a chunk of their energy goes into recovery.

I am doubtful of the impact of a letter or an email on the recovery, however well-drafted it may be. Not that there will not be an impact, but it may not be a lasting one, and things could come back to square one within months if not in weeks.

Strategies for Effective Sales Recovery

To overcome this challenge, your company may not reward salespersons only on meeting the sales target. Rather, take into account:

a) % of credit sales against the total sale
b) the number of days of the credit sale
c) recovery done within the credit period against the total sale

Additionally, you may start calculating the Account Receivable Turnover Ratio (ARTR) for the sales department and for the individual salespersons as well.

Credit sales are always a trap. Nevertheless, many companies fall into this trap willy-nilly. However, once the brand image of the company is developed, it becomes difficult to change the perceptions of the customers.

Finally, credit sales also depend on the strength of the product/services. If the products are world-class, the company starts dictating the terms rather than getting dictated by the customers.

Thanks,

Dinesh Divekar

Dear Tariq,

Please find the draft below:

Dear (name) Designation Employee Number

Dear XYZ,

While reviewing your sales and payment recovery records, we have identified a significant amount of dues that have not been recovered from clients, and these amounts are overdue. In the normal course of duty, you should have recovered the amounts due from the clients long ago. However, we are providing details of the overdue payments. This detail is categorized age-wise.

Sr. No.

Delay in Recovery

Sr. No. Client Bill Date Bill Amount Due Date of Payment Delay in recovery (No. of days)

The above details clearly show that you have failed to recover the overdue payments from the client/clients. Through this mail/letter, you are hereby directed to recover the abovementioned overdue payments from the client/clients within 7 days of the receipt of this mail/letter and submit to the concerned department.

Should you fail to comply with the direction within the stipulated time, it will be construed as dereliction of duty (which is a serious misconduct as per the rules of the Company) and will be viewed seriously by the Company.

Please note that inaction on your part has caused severe problems for the Company.

Warm Regards,

Bharat Gera
AV Consultants
[Phone Number Removed For Privacy-Reasons]

(By mistake, the start of the letter got posted first, this is the other part, the letter should be prepared with both parts. The inconvenience is regretted.)

Dear colleague,

While overdue credit is a common phenomenon, there is no foolproof formula yet to check it.

I don't know how far incentivizing will help as it may be maneuvered to use it as an extra source of earnings by salespeople without adding worthwhile value.

You should impress upon the salesperson to make a plan of recovery within the committed span, starting with the oldest first and next in that order. Give a maximum recovery time of a fortnight and tell them that any failure will result in recovering the outstanding credit amount from their salary or incentive payments if you have some scheme for it in place.

It may sound like harsh action, but it may help in pushing their potential/innovative actions to a higher notch in effective, result-oriented recovery of overdue amounts. Let us hope so.

Regards,

Vinayak Nagarkar HR and Employee Relations Consultant