What is a common practice when collecting overdue payments?

Implementing a standard procedure for follow-ups is a common and effective practice in the collection of overdue payments. Establishing a systematic approach to follow up with customers helps ensure that reminders are sent out consistently and timely, fostering accountability for both the creditor and the debtor. Regular follow-ups can involve sending reminder notices, making phone calls, or engaging in personalized communication, all aimed at prompt payment. This method not only helps remind the customer of their obligation but also reinforces the importance of maintaining a good relationship by providing clear communication regarding payment expectations.

In a business context, having a standard procedure also allows for tracking overdue accounts more efficiently and helps streamline the collection process, making it easier to identify patterns of non-payment and adjust strategies as needed. Additionally, it can enhance the cash flow for the business, as timely collections contribute to maintaining financial stability.

The other options, while they may appear beneficial in certain contexts, do not address the fundamental need for consistent communication and follow-up in accounts receivable management. Offering discounts does not guarantee payment, waiving late fees might set a precedent that encourages future delays, and eliminating all credit terms could harm customer relationships and reduce sales. Hence, a well-defined follow-up procedure remains the most practical and advantageous approach to collecting overdue payments.