From Florida
Gray Poehler |
11/17/2017
Q: Your recent article about managing one’s cash
flow emphasized the importance of converting accounts receivables (uncollected
money owed to you) into cash in the bank. Can you offer more suggestions how to
speed up the collection process without aggravating and risking the loss of the
customer?
A: The process of collecting money, while a delicate
subject, can be handled in a variety of ways. You must first come to grips with
the fact that you are entitled to be paid for your services. It is quite common
these days for the provider to ask the customer for full or partial payment at
the point of sale. This is the absolute best way to handle the situation. If
the customer is disciplined to pay at point of sale, you have eliminated your
collection problem.
Remember, once you have rendered the service or released the article for
sale, you no longer have leverage with the customer.
Accepting credit card payments also can help, so you may want to sign up
for a merchant account with Mastercard or Visa. Be sure to encourage customers
to use this option. You do pay a small fee for the service, but it can be built
into your invoice, and the cost pales in comparison to those of a collection
agency.
Now, there are some instances where the customer wants to see the finished
product before payment is rendered. This is especially true with services
provided by building contractors. However, there are materials to be purchased
and labor to be paid for on a weekly basis. The wise contractor will request a
deposit and periodic draws as the project advances, with the balance due at
completion.
In those instances where it is necessary to extend credit terms, make sure
that your invoice arrives promptly and is clear and concise. It should itemize
the charges, indicating how the check should be made payable. Be sure to state
that payment is due upon receipt, and include a self-addressed return envelope.
It is extremely important to age your accounts receivables (outstanding
monies owed to you 0-30 days, 31-60 days, more than 60 days). Focus first on
the largest amounts due, followed by the over 60-day accounts, then work
backward. Small business accounting programs such as QuickBooks can easily
create invoices and age your accounts receivables.
Finally, if you feel the need to press the customer for payment, send a
customized, personal note, not a lifeless form letter. Remind the client of
their original promise to pay and ask for full and immediate payment. If no
response, by all means get on the telephone. Most businesses wait too long to
call.
Martin Kahn, SCORE Counselor
Visit us at: www:scoresouthflorida.net
