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Name of author Rick Baker, P.Eng.

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Collecting Accounts Receivable…7 Tips

by Rick Baker
On Dec 14, 2010
7 Tips for creating smoother & less-stressful collection of money owed to you
  1. Understand the party you are dealing with:
    • Is the party creditworthy?
    • What’s the party’s current financial and ownership status?
    • What’s the party’s process for paying its bills? [who, what, when, where, how…why?]
    • Who are the key contacts?
    • Understand exactly how they go about making payments
    • Understand how the party pays its best supplier
  2. Understand the specifics of the Purchase & Sale agreement
  3. Keep your invoices simple and clear
  4. Issue your invoices consistently…same timing, same method of delivery, etc.
  5. Over-communicate about your invoicing process…example: send notes explaining your process
  6. Have a disciplined collection process…write it out…make sure each step is clear. For example:
    Step 1: issue invoice on the __ day of the month
    Step 2: __ days later contact __________ to ensure your Client received your invoice
    Step 3: __ days prior to due date contact ___________ to __________
    Step 4: depending on the complexity of your Client’s internal approval process…repeat Step 3
    Step 5: [from time to time] when due date arrives contact your Client to thank them for paying
    Step 6: in the event payment did not arrive on time
    • immediately contact your Client to let them know
    • request your Client’s – i.e., your key contact’s - help…ask for an immediate correction
    • be friendly, be objective, be clear, & be firm
    Step 7: in the event payment is ‘stretched’…see the next Thought Post on this topic…or contact us for suggestions
  7. Make sure your employees are trained on all aspects of your collection process…including ‘interpersonal skills’ training
Footnotes:
Question: How can we do better at collecting?
Answer: Have a disciplined collection process, make sure your people always follow that process, and make sure your Clients know your people have a process and will be following up closely if/when payments are not made on time.
Question: Why spend time on improving collection?
Answer: Improving collection increases your bottom line a number of ways:
  • At one end of the spectrum – it reduces bad debt
  • At the other end of the spectrum – it reduces your people’s stress levels…better concentration, less mistakes, less talk & more action, etc.
  • In between – it reduces use of your line of credit and interest costs, it makes your accountant happy, etc.

Tags:

Leaders' Thoughts | Pay! - a philosophy about money

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Sales Tweet #107

by Rick Baker
On Dec 14, 2010
Sales Tweet #107 Question for Clients: What are the 5 most-important things you need to succeed in business?
 
The Thinking Behind the Sales Tweet
If you know what your Clients need to succeed in business then you are able to help them get what they need. One example is Clients’ Clients. If you provide a good Client to your Client then your Client will appreciate it. That is a slam dunk. Every business wants good Clients. But – what else do your Clients want? Good suppliers? Good employees? Good technology? All of these sound like good ideas. But – why guess when you can ask you Clients what they need?

Tags:

Questions?: The Art of Asking Good Questions | Sales | Thought Tweets

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