Tips for Collecting Your Past Due Accounts Receivable: Create a System


By Greg Beverly


One of the biggest drains on the cash flow of small businesses is the slow collection of accounts receivable. In cases where accounts receivable are out of control, you can bet that cash flow is out of control as well. I don't know about you, but the folks I have to pay are not very concerned with whether or not I am getting paid in a timely manner. They want their money. Why is it then that we have such a difficult time holding our customers to the same standard. Why on earth should we feel guilty calling our customers to ask for OUR money? I don't know, but many of us do.

The easiest thing to do is to put off contacting the customer for another day or two or worse, send a letter that either gets ignored or thrown in the trash. Most businesses take the easy way out. A short impersonal letter asking for past due payment helps you to feel as though you are doing something about your problem and also helps you avoid the personal conversation with your customer. Unfortunately, letters while better than nothing, do not get nearly the results that are obtained through personal contact.

The best and easiest way to make sure that all of your past due customers are contacted and contacted regularly and at scheduled intervals is to set up a system for contact. Your system should include the timing and content of each of your contacts. For instance, set up your contact to be x days after the due date. Your second contact should be x+7 days later, etc. The second and third contacts are just as important as the first. It shows that you are on top of the situation and are not going to go away.

You should have a script that you use in these situations. This forces you to make the contact. Each day you will know exactly who is late and what call or contact they are due for. This takes away the guesswork and the procrastination.

There is a time for letters and written communication. That time comes when your personal contact has not been rewarded with payment. It is now that, unfortunately, you must begin to build a file that you can use should collection or legal action become necessary. As with the personal contacts, you should have standard letters for each situation. Letters for x days past due, letters for missing a promised payment, etc.

Yes, there is alot involved in setting up an accounts receivable collection system. But what is it worth to you? How much of YOUR cash is currently out of your reach because of past dues? Once you have the system set up, it will save you hours and hours of time and thousands of dollars in bad debts. How great would it be if you could look at all of your past dues and know exactly what to do and exactly when to do it? What if you already knew exactly what you were going to say or write for each? How much would it be worth to cut your past dues in half? How about cutting them by 75% or more?

That's the power of a system. Specifically that's the power of having an accounts receivable collection system. No more guesswork, no more inconsistencies and lots more cash in your bank account.

Greg Beverly, CPA, MBA has been helping small business owners increase cash flow for more than 21 years. If you would like to learn more about setting up your very own system for collecting those past due receivables, visit: http://www.accountsreceivable.yougethelp.com.


More Resources

Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exiting

More Management Information:

Related Articles


Intercultural Management
The role of a manager is evolving in response to the needs of companies operating on the international stage. The complexities of globalisation brought to the area of management are great and require the 21st century manager to adapt in order to offer modern solutions to modern problems.
The Power of Positive Communication
Communication is the key to your success at work, at play, and at home. Here are six tips that will make a difference in your life:1) People judge others by their actions.
Are You Prepared for a Disaster?
Yesterday I look at my calendar and saw that my newsletter was on my calendar for today. I wondered what I would write about.
5 Ways of Increasing Business Profits
The economy may finally be turning around and showing signs of a rebound. Interest rates have begun to rise and the stock market is recovering from the lows it experienced in the last couple of years.
Are You At The Mercy Of Computer Geeks?
Many business owners are sabotaging their business without even realizing it. They are completely out of the loop when it comes to all technology aspects of their operation such as websites, computers and software.
Productivity Through Positive Reinforcement
Most people just want to be appreciated. If you're a manager, that's something to seriously think about as you set the tone for maximum productivity.
Eliminate Performance Anxiety Forever
You've had many years of training in your craft as a performer, singer, actor etc. but if you still feel haunted by the ravages of Performance Anxiety your career may be in serious jeopardy.
Contract Management Software: the Solution to the Problem of Coordination
Charles Petrie, from Stanford, released a short article entitled "The Problem of Coordination," which highlights 4 categories in which businesses find it difficult to connect:InteroperabilityAgent CommunicationSemantic UnificationCoordinationThough this article refers to a specific type of business, its principles are just as applicable to any business, especially when collaborating on a contract. Contract collaboration and management is difficult in any business, and the negotiations can go on for weeks, months, or even years.
25 Great Ways to Find the Right People and Not Break the Bank
Are you trying to hire dozens of hourly workers or a senior executive? Where do you look and how do you get the word out? There are many ways to find the right people besides placing want ads.Here are 30 innovative and inexpensive ways to expand the pool of potential applicants.
Training and ROI (Return On Investment)
Statistics consistently reinforce that the biggest challenge in today's contact center environment is agent training. Turnover continues to be high; new hire costs are on the rise--$6500 per agent! At the same time, losing customers because of bad call experiences negatively impacts your bottom line.
The New Economy
This technological revolution has organization, efficiency and productivity requirements well above what was needed in the past. And although all three of these have always been important, they are now considered crucial in the growth and maintenance of businesses worldwide.
Einstein, The Universe, And Leadership
Every since serving a hitch in the military, I have been nagged by the question that's been hanging around leadership since time immemorial: How can some leaders persuade people to believe in them and follow them and other leaders can't? But it wasn't the military that provided me with a framework to answer that question. It was Albert Einstein and his quest for the unified field theory of the universe.
Micromanagement and Delegation
Recently I had a long discussion with a friend of mine about Managers and managing. She is a former HR Manager for several major companies and was bemoaning the fact that training for managers has been cut back so significantly in recent years and that managers no longer receive the type of help, guidance and assistance that they received just a few short years ago.
Innovation Management - Diversity Can Make All The Difference
Companies are welcoming a diverse range of employees (The Sunday Times, April 10 2005). Doh!It is incredible that this concept is getting coverage in 2005.
Management Consultants, Creativity, Innovation
Most firms have intelligent, capable, knowledgeable managers who are very good at day-to-day problem solving. So why do they need management consultants? There are occasions when consultants bring in specialist competencies, but if that is not the case then their value only really lies in their outside perspective - their ability to frame break from the "company way" and their ability to come up with and implement good ideas that would not otherwise have been thought of.
Getting the Most from Appraisals
Does your organisation have one of those annual 'occasions' that few look forward to: the annual appraisal or performance review? How do you look forward to it? I wonder how people talk about it before and after?Are appraisals worth doing? If done properly - yes. If done poorly - no!!!Why have appraisals? When carried out properly they can achieve a number of benefits for all parties.
A Comprehensive Sarbanes Oxley Act Summary
Individual and corporate security stand in the center of the Sarbanes Oxley Act summary, as they are the areas that suffered most changes. New criminal and civil penalties were announced for security violations and a new system of certification of internal audit efforts was set.
First Things First -- Process BEFORE Technology
Here's a brief story I encountered while leaving Newark International Airport following a recent business trip. Hard to believe, but true.
Creativity and Innovation Management - Hierarchies
Creativity can be defined as problem identification and idea generation whilst innovation can be defined as idea selection, development and commercialisation.There are other useful definitions in this field, for example, creativity can be defined as consisting of a number of ideas, a number of diverse ideas and a number of novel ideas.
Empowering Others - Giving Them Some Control
It's been a pretty good weekend around the place - not done a lot, but I have done what I've wanted to do - and that makes the difference.I changed my role when I first left the employed world.