Almost every company that calls us about a delinquency problem actually has a policy problem. They don't collect badly: they sell badly, in the sense that they extend credit without ever having decided to whom, how much and on what terms.
A credit and collections policy is not a manual to file away. It is a set of decisions made before the first missed payment, so nobody has to improvise them with an already angry customer on the phone.
1. Decide who gets credit
The first mistake is treating credit as something granted by default to anyone who buys. Selling on credit is lending money. And lending money requires written criteria.
The minimum your policy should define:
- What is required before opening the credit line. RUC (taxpayer ID), financial statements or tax returns depending on the amount, trade references, and a signed contract or document. Not a verbal promise.
- Who approves each tier. A salesperson should not be able to approve the same amount as a finance manager. Set tiers and names.
- What the limit per customer is and what happens when it is exceeded: shipments stop, no debate.
- What document gets signed. This is where the future of collections is decided. An invoice alone is not an enforceable instrument; a promissory note is. Having a promissory note signed when the credit line is opened takes five minutes and completely changes the collection path if something goes wrong.
2. Separate who sells from who collects
It's the point that meets the most resistance and delivers the most results.
When the same account executive who wants to renew the contract is the one who has to chase the invoice, the conflict is structural: nobody seriously pressures the person their monthly commission depends on. The result isn't gentle collection; it's no collection, and the debt ages until it becomes a problem.
Separating the roles doesn't mean being tougher. It means the salesperson keeps their role —looking after the relationship— and collections gain the one thing they lack: consistency.
3. Write down the sequence, with owners and channels
Collections work as a sequence, not as nagging. Each stage needs a message, a channel, an owner and a date. In writing, not in someone's head.
A structure that works:
- Before the due date. A courtesy reminder, automated, with no drama. It confirms the date and amount. Many missed payments aren't intentional: they're an invoice misplaced in the customer's accounting department.
- First days past due. Administrative contact, not sales. The focus is to verify: did you receive the invoice? Is it approved? When does it enter the payment cycle?
- Sustained delinquency. The point of contact changes. It's no longer an assistant: it's someone with a name, authority and the ability to offer or deny payment terms.
- Before escalating. Formal written notice, detailing the debt and the real consequences. No threats that won't be carried out.
What conveys seriousness isn't volume or anger. It's that every stage arrives on time and that what was announced actually happens. A notice repeated three times with no consequence teaches the debtor that nothing will happen.
4. Define what can be negotiated, before negotiating
The worst collections conversation is the one where the agent has to make up the offer on the fly. The policy should state in advance:
- Up to how many installments payment can be deferred, and with what minimum down payment.
- Whether default interest is waived, and who authorizes it.
- What is required in return: a signed document, always.
- What happens if the agreement is broken once. And what happens if it is broken twice.
A legal detail worth using: a partial payment or a written acknowledgment of the debt interrupts the statute of limitations (article 2418 of the Civil Code, Código Civil). A well-documented payment agreement doesn't just organize collection: it restarts the legal clock in the creditor's favor.
5. Put the legal limits in writing
This is the part that protects the most value. In Ecuador, collection activity has had express rules since the amendment to the Organic Consumer Protection Law (Ley Orgánica de Defensa del Consumidor) published on February 11, 2022. Its article 49 governs collection by phone, messages or email. The framework is clear: one contact per day per channel, Monday to Friday, between 7:00 a.m. and 8:00 p.m., from an identifiable number, and with the debtor, their co-debtors and guarantors.
Your policy should capture that framework as internal rules, with team training and a record of every action. That way every collection is firm, documented and defensible.
6. Measure, and always measure the same thing
A policy without measurement erodes within a few months. You don't need a complex dashboard; you need a few metrics, reviewed at the same frequency and with the same definition.
The basics: how much of the portfolio is current and how much is past due, how that delinquency is spread across day buckets, what percentage of the past-due amount was recovered in the period, how many payment agreements were signed and how many are being kept, and how much time passes on average between the due date and the first right-party contact.
That last figure is the one that most often surprises management, and the easiest to fix.
7. Review it once a year
Credit limits set three years ago no longer match today's prices. Customers have changed. The team has changed. A policy that isn't reviewed stops reflecting how the company works, and improvisation sneaks back in through the back door.
How we approach it at FEXCOB
Much of our work with companies and institutions isn't collecting: it's putting things in order before collection. Our collections training and compliance service works on exactly this —the written policy, the staged sequence, the legal limits and the training of the team that deals with the debtor—, with the traceability an auditable process requires.
We have been recovering portfolios in Ecuador, Colombia and Peru for more than twenty years, and the conclusion is always the same: the companies that collect best are not the ones that push hardest. They are the ones that decided ahead of time.
You may also be interested in: the metrics to watch every week · the legal limits of collection activity
Legal sources cited: Organic Consumer Protection Law (Ley Orgánica de Defensa del Consumidor), article 49, as amended by the Organic Law to Defend the Rights of National Financial System Customers and Prevent Improper Charges and Unsolicited Services (Ley Orgánica para Defender los Derechos de los Clientes del Sistema Financiero Nacional y Evitar Cobros Indebidos y Servicios No Solicitados) (Official Register Supplement 1, February 11, 2022); Civil Code (Código Civil), article 2418.
This article is for informational purposes only and does not constitute legal advice for any specific case.