Cash Management Secrets

Proven cash management strategies that improve cash flow, collect past due money, and increases profits in tight credit markets.

How to Collect Past Due Money

In the 1990's when my clients owed me more than $325,000.00 in receivables, I got a hard lesson on collecting past due money. Cash Management Secrets is about helping you avoid the mistakes I made. Here are a few tips to get you started:

• Have a system for collection before money is due you, including letters and call series,
• Keep copies of payment information on file with customer accounts along with other contact information,
• Be clear about your credit terms upfront using a credit application,
• Send invoices on time every time, with clear information about what is due,
• Provide clear terms before doing business, take a deposit if possible,
• Use a soft collection method meanwhile, prepare for hard collection if necessary,
• Watch for red flags on your accounts, have a clear credit extension policy,
• Make it easy for accounts to pay over the phone or via fax machine,
• Call immediately on overdue accounts and replace "missing" invoices by fax,
• Document all conversations with customers noting any promises made,
• Schedule regular calls and letters until account is paid in full,
• Never threaten legal action unless you are willing to take it,
• Work on behalf of the customers interest in doing business with you in the future,
• Know when it costs more to collect than you will get back on the account,
• Don't be embarrassed to call on accounts that owe you money, it's your money,
• Verify services were delivered as promised before trying to collect,
• Address any customer service issues as well as document those concerns,
• Listen to your customer, never be rude, don't make threats, and avoid legal trouble,
• Maintain internal credit measures to identify slow pay accounts early,
• Be okay with firing your customers and cutting your losses up front by focusing on profitable customers,

You'll discover more on collecting past due money with an interview I did with Bob Blackburn on "Cash Collection Methods." It's a short interview, under 30 minutes.

The key to collecting past due receivables is staying on top of those accounts. That is especially important in a tightening credit and cash market. These tips will get you started collecting past due accounts easily.

© 2008 Cash Management Secrets, All rights reserved.

Justin Hitt learned from first hand experience in his computer consultancy and can teach you how to collect your money quickly. For more cash collections insights visit http://CashManagementSecrets.com/

Posted by Justin Hitt on September 28, 2008 8:37 AM | Permalink

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