Do you ever wonder why some companies have no AR collections problems and some do? Over the years of my career, I have seen my share of companies that have collections problems. Most of the time, it is because they don’t make a priority of contacting the customers before they became problems. On the other hand, those who did not have collections problems contacted customers well before collections had any potential for problems. Effective collection procedures begin well before the bill is due and payable. The elimination of problems, before the payment due day, will greatly enhance the ability of the company to be paid on time.

First of all, when you deliver products or services to your customers, make sure the invoice(s) have been created, and delivered at the same time. Few days after the invoice has been delivered, your AR person should call the customer, not email, whether the product(s) or service(s) have been delivered satisfactorily. This MUST be perceived as a “Customer Service Call,” not a call to see if the bill is going to be paid. We are making sure that everything is satisfactory with the order and our service. More as an “after thought,” you are checking to see if the invoice was received and that payment is anticipated as per the terms of the invoice. Problems must be addressed and corrected before an invoice is due for payment. Your call may go like this:

“This is _________, from XXX Co. I am calling to make sure everything is satisfactory with your job.” Pause and wait for a response. If the customer has a complaint, this must be addressed immediately.

“Also, I would like to be sure you received our invoice for $__________ dated _________”. Pause and wait for a response. If the customer has not received this invoice, this should be addressed immediately. If the invoice was not received, see that a copy is faxed or emailed to them and then that a duplicate is mailed immediately. If the bill was received and no problems exist that would delay payment, simply respond:

“Thank you, we appreciate your business. I’ll indicate, on my records, that everything is satisfactory and we can expect payment on ______________________________(the due date).”

This call should not be made to aging accounts or accounts with other payment terms. Remember, the purpose of the call is to eliminate delays that cause delinquency. The sooner you receive a commitment to be paid, the less likely there will be a problem getting paid on time.  Hopefully these tips will offer some financial help for small business and businesses of all sizes.