Showing posts with label credit. Show all posts
Showing posts with label credit. Show all posts
Friday, April 22, 2011
Check This Out...
I just released Accounts Receivable/Collections Tips Part II. Check it out: http://heyoverbey.tumblr.com/
Thursday, March 31, 2011
Accounts Receivable/Collections Tips Part I
Have a mid to small-sized business? Accounts receivable and collection of past due accounts your favorite part of the business cycle? Nah, I didn’t think so. Use some of my 13 years of experience to remove some of the fear and stress associated with this heavier and, often times, more stressful part of running a successful business. And, trust me: being successful in business means you will pay attention to this important piece of your accounting. Wanna fail? Ignore A/R!
Here are a few ideas:
+ Computerize.Smaller businesses can use Quickbooks just fine. Mid to larger sized firms need specialized accounting software that can put a clear focus on A/R.
+ Use reports.Those reports in Quickbooks and systems like MAS are there for a reason. You can quickly spot trends in the way your customers pay - or don’t pay - and then meet with your team to develop ideas to address these trends. You are going to learn a lot about aging, DSO, trending, payment history, how aged receivables impact your company’s worth, who your most profitable customers are, where risks are - and a lot more.
+ Send regular statements.Sounds like a no-brainer, I know. I once had a client who sent his statements out sporadically. Funny, payments often came in that way as well. He was teaching his accounts how to pay this way. By creating a “due date” and sending out regular statements corresponding to those dates you have set a pattern and an expectation. It will weed out a lot of slow pays and late pays.
+ Sales tip: Use “white space” on your statements to promote special products, offers and events. Snuck this one in. It will connect your billing piece of your business with the sales staff - and, trust me, they will like it.
+ Accept multiple methods of payment. If possible, add check-by-phone acceptance to the methods of payment you offer. There is a lot of quality and inexpensive software out there. The more ways to pay = more payments. Sales likes this, too - this is a crossover utility!
+ Speaking of the sales pros - use ‘em.They already have a rapport with your client if they are the ones who sold them. When appropriate have them pick up the phone and make a call. They can always blame it on accounting: “Yeah, it’s those number crunchers over in A/R. They have reports and deadlines. Tell me what’s going on…”
+ Resolve disputes and deductions immediately. Fight the temptation to put off researching a customer’s claim about why they didn’t pay. Address these now! The longer you put it off, the more likely the customer (and you) forget details about what was going on. I once had a client who had to write off thousands in 90+ days accounts receivable in “good faith” because the trail had gone cold on the discrepancies. The customers, although incorrectly, would claim that since the company never cared why would they? And they would also claim it was so old that they didn’t have the originial notes and then refuse to pay. But they wanted to write a new order! Nipping issues in the bud from day one gets payment. It also establishes credibility. Integrity.
+ Never make collecting “We vs. You”. Collecting is already a tough job. It automatically and subconsciously raises defenses in all of us when it comes to past due bills. Try to add in every call: “How can I/we help you to get the account current?” Then - here comes the hard part - listen! You may hear exactly what you need to fix the delinquency! This makes them feel like you are working with them and not against them. And, if you are smart, you are with them. This translates to a better relationship with your client which translates into more sales.
+ Use late notices. I know you think people throw them away - and they do! But these letters - differing from the format of a statement - send a clear message to the client that your firm has not forgotten about the account. Even if they do throw it away, they know you know! They have gotten a message even without reading the message. Send letters! 30-60-90-120 days and pre-legal or pre-agency letters.
There is a lot to the credit and collections process. A lot that as entrepreneur or owner you may not have thought about or want to think about. Let me think about it for you. There is a lot more we need to cover. Watch for Accounts Receivable/Collections Tips - Part II.
Here are a few ideas:
+ Computerize.Smaller businesses can use Quickbooks just fine. Mid to larger sized firms need specialized accounting software that can put a clear focus on A/R.
+ Use reports.Those reports in Quickbooks and systems like MAS are there for a reason. You can quickly spot trends in the way your customers pay - or don’t pay - and then meet with your team to develop ideas to address these trends. You are going to learn a lot about aging, DSO, trending, payment history, how aged receivables impact your company’s worth, who your most profitable customers are, where risks are - and a lot more.
+ Send regular statements.Sounds like a no-brainer, I know. I once had a client who sent his statements out sporadically. Funny, payments often came in that way as well. He was teaching his accounts how to pay this way. By creating a “due date” and sending out regular statements corresponding to those dates you have set a pattern and an expectation. It will weed out a lot of slow pays and late pays.
+ Sales tip: Use “white space” on your statements to promote special products, offers and events. Snuck this one in. It will connect your billing piece of your business with the sales staff - and, trust me, they will like it.
+ Accept multiple methods of payment. If possible, add check-by-phone acceptance to the methods of payment you offer. There is a lot of quality and inexpensive software out there. The more ways to pay = more payments. Sales likes this, too - this is a crossover utility!
+ Speaking of the sales pros - use ‘em.They already have a rapport with your client if they are the ones who sold them. When appropriate have them pick up the phone and make a call. They can always blame it on accounting: “Yeah, it’s those number crunchers over in A/R. They have reports and deadlines. Tell me what’s going on…”
+ Resolve disputes and deductions immediately. Fight the temptation to put off researching a customer’s claim about why they didn’t pay. Address these now! The longer you put it off, the more likely the customer (and you) forget details about what was going on. I once had a client who had to write off thousands in 90+ days accounts receivable in “good faith” because the trail had gone cold on the discrepancies. The customers, although incorrectly, would claim that since the company never cared why would they? And they would also claim it was so old that they didn’t have the originial notes and then refuse to pay. But they wanted to write a new order! Nipping issues in the bud from day one gets payment. It also establishes credibility. Integrity.
+ Never make collecting “We vs. You”. Collecting is already a tough job. It automatically and subconsciously raises defenses in all of us when it comes to past due bills. Try to add in every call: “How can I/we help you to get the account current?” Then - here comes the hard part - listen! You may hear exactly what you need to fix the delinquency! This makes them feel like you are working with them and not against them. And, if you are smart, you are with them. This translates to a better relationship with your client which translates into more sales.
+ Use late notices. I know you think people throw them away - and they do! But these letters - differing from the format of a statement - send a clear message to the client that your firm has not forgotten about the account. Even if they do throw it away, they know you know! They have gotten a message even without reading the message. Send letters! 30-60-90-120 days and pre-legal or pre-agency letters.
There is a lot to the credit and collections process. A lot that as entrepreneur or owner you may not have thought about or want to think about. Let me think about it for you. There is a lot more we need to cover. Watch for Accounts Receivable/Collections Tips - Part II.
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