The purpose of a Monthly Statement is to:
a) inform the customer of the current standing of the account
b) provide the customer with a clear and concise report of the previous months transactions
Note: It is optional whether you choose to list all transactions during the month (being, those outstanding and those paid) or just those that remain outstanding
c) request all arrears outstanding from the past month
Your first arrears contact is your ‘Monthly Statement’. The monthly statement is your opportunity to inform your customer of all outstanding overdue amounts from the previous 30 days. I have never heard of a customer who complained about receiving a monthly statement. After all, the statement is a widely used and common form of listing transactions between buyer and seller and in most cases welcomed by the customer.
If you send statements, you are highlighting the current situation to your customer. As such, you should take it for granted that they are fully aware of their financial pos ition with you. Therefore, if you do not receive the arrears listed on the statement within a few days, you should assume that you must now make immediate and direct contact with your customer to have any prospect of the customer paying in the short term.
To highlight the arrears on a statement, you should have a clear, separate box indicating the arrears figure: the date overdue from: and the action you want the customer to take.
Some companies have statements that provide Aged Debt Analysis at the end of the statement, as follows:
0 – 30 days £400
30 – 60 days £300
60 – 90 days £200
Over 90 days £100
In my humble opinion, this style of statement almost implies that you accept that arrears will occur. Further, that you have no more concern for an old debt than a new debt. And you are sending a message to old, new and potential customers that you are no stranger to aged debt.
Probably the main danger of this system is the customer who, using the above example, sends you a cheque for £300 and expects you to be over the moon because they no longer have arrears in the last two categories!