I’ll be writing a series of posts on how to speed up your Accounts Receivable collections. For those of you who can’t wait, here’s the full list of 15 with one bonus.
1.) Make a commitment – keeping on top of your collections isn’t fun, but it is necessary.
2.) Provide value in the relationship – be the vendor or service provider the customer can’t live without and won’t want to damage the relationship with.
3.) Set the standard up front and be firm – your customers will respect you if you hold firm to your payment standards. The ones who get paid on time are the ones who insist on getting paid on time.
4.) Use late charges and enforce them – part of setting standards and being firm.
5.) Invoice quicker – invoice as soon as your work is done.
6.) Send invoices electronically – save a couple of days’ mail time.
7.) Invoice more often – no law says you can only invoice at the end of the month.
8.) Get up-front deposits – the ultimate in quick collection.
9.) Develop a working relationship with the client’s A/P person – if they like you and respect you, you will go to the front of the line.
10.) Call in a couple of days to see if they got your invoice – eliminates the “Gee, we didn’t get your invoice. Can you send a copy?”
11.) Call in advance of the due date – to head off problems before the account is overdue.
12.) Accept payment electronically – this not only gets the money into your account quicker, but eliminates “The check is in the mail.”
13.) Send thank-you’s – especially near the start of a new relationship to acknowledge quick payment.
14.) Deposit checks right away – sets the tone for how important prompt payment is to you.
15.) Make collection calls as soon as accounts are late – if you’ve already called to head off problems, there should be no reason for late payment.
16.) Cut off chronic late payers – a pattern of late payment indicates possible financial problems with a customer. Don’t be the one left holding the bag when they declare bankruptcy.
Here are the posts discussing these 16 items in more detail: