13 Quick Tips to Keep Your Accounts Receivable Flowing

 

Unless you are actually in the collection business, there is a good chance that you have quite a few higher priorities than managing your company’s accounts receivable. You might even delegate that task out to an assistant or employee without much thought.

However, when those receivables stop flowing into your bank account, all of a sudden the accounts receivable department becomes a top priority. In order to prevent serious accounts receivable problems before they get started, here are 13 quick tips to make sure your receivables continue flowing smoothly.

Place Due Dates on Everything 

Every single bill, statement, or notice that you send out to a client or debtor should contain the exact and up-to-date information about how much they owe you, when that amount is due, and when it will be considered late.

Bill Clients Before Due Dates 

It is a common practice for companies that bill in Net-30 terms to wait until the entire 30 days has passed before sending a bill to their clients. However, many companies are known for paying bills in the order that they come in the door. That means you should always get your invoices out as early as possible. This gives the client plenty of time to budget their payment, and it also increases your chances of getting paid sooner.

Address the Bill to the Person Making the Payment 

Addressing your statement to the person who is in charge of the finances instead of the overall company is a nice personal touch that just might make a difference if that person has to make the tough choice on which bill to pay this week and which one to worry about next week.

Keep Good Client Records 

Knowledge is power, and the more you know about your clients, the more power you have. Learn as much as you can about everyone who works at every company you deal with and keep all that information in some type of CRM software. This will ensure that you have an alternate contact should your primary contact suddenly leave a specific company.

Have a Plan in Place 

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You need to have a specific plan in place for how you expect to operate at every single step in the billing and collection process. This removes the need to make any decisions under the stress of a difficult collection, you are simply following the plan.

Make the Calls 

Your most likely point of contact with all of your clients and debtors is the telephone. When your billing and collection plan calls for you to place a phone call inquiring about a payment, it is vitally important that you actually make the call. Don’t put it off until tomorrow.

Keep Making the Calls 

While it is incredibly easy to rationalize putting off making the initial collection call, it might be even easier to rationalize putting off the follow-up calls. Don’t fall into this trap. If you don’t make the calls, you are throwing your best chance to collect payment out the window.

Set a Limit 

If a customer falls behind in their payments, at some point you will have to decide when to stop doing new business with them until the old business is resolved. This decision is much easier if you make it in advance and include it in your billing and collection plan.

Charge Interest and Late Fees 

The rules vary from state to state, but if you are allowed to charge interest and late fees, you definitely want to do so as a partial compensation for your aggravation. However, you are going to want to make sure that you are well within your legal right to do so before adding the charges.

Record Everything 

In the event that you have to take a client or debtor to court, you will want to have voice recordings of all of your telephone calls. The rules for recording phone conversations also vary from state to state, so you should make a point to notify the client or debtor that you are recording the call.

If you are attempting to collect debt in California, where the laws are very strict, the recording may come in handy as proof that you followed all of the regulations.

Be Flexible 

There will be situations where the client or debtor simply can’t live up to your agreement. You should have a contingency plan built into your billing and collection plan to allow for negotiations when no better alternatives are present.

Send the Letters 

Much like the collection phone calls you have to make, collection letters can only be successful if you actually send them. Don’t put off writing and sending them!

Pull the Trigger on Collections 

If your plan calls for you to turn an account over to a collection agency at a certain time, do not hesitate to pull the trigger and turn the account over right at that time. Every day that goes by exponentially decreases the odds of your collection agency recovering the amount owed, so don’t drag your feet!

There is a good chance that you have already worked most of these ideas into your billing and collection plan in one form or another. However, take a closer look and make sure that you aren’t missing any of these components and that you are actually following your plan in the heat of the moment. That is the best way to ensure improvement in your accounts receivable department.

 

By | 2017-09-16T12:20:54+00:00 October 21st, 2014|Blog|0 Comments

About the Author:

Graduated from University of Utah - business degree 1990. Served in US Army as an interrogator / linguist, then as a tactical intelligence officer - Military Intelligence 1986-1990. Managed Western US sales operations for NY based collection agency 1990-1992. Founded Direct Recovery Associates, Inc. 1992-present