Part 3 of a 4 part series

Warning Signs:

• Receivables exceed 50 days outstanding.
• Days receivables outstanding increases significantly.
• Significant decrease in sales/receivables.

Steps to Improve: SPEEDING COLLECTIONS

• Get advances, deposits, progress payments whenever possible.
• Bill before or soon after delivering goods or rendering service.
• Shorten the time between placing the order and the shipping date.
• Shorten the time between shipping date and date the customer gets the invoice.
• Ask your customers to pay by invoice rather than by statement.
• Use stamped pre-addressed envelopes to speed payments.
• Resolve customer-billing disputes promptly.
• Actively pursue collection using written policy enforced consistently.
• Test actual implementation of collection policies looking for improvement.
• Shore up listless collection policies.
• Hold customers to payment terms to earn discounts.
• Charge interest on delinquent accounts.
• Use fax machine to speed collections and trim expenses.
• Start sending out semi-monthly statements.
• Collect cash where you can be wire transfer and e-mail.
• Use third party credit (credit cards, direct finance) instead of house credit if you can.
• Utilize major credit cards rather than open accounts where practical.