When you work hard to provide a great product or service, you have every reason to expect to get paid on time.  Today most companies are finding it harder to collect from their customers.  Getting paid on time, every time should be a priority in any business.  Here are a few ways to improve the collection process.

Accurate Invoices - Preparing accurate invoices in a format understandable to your customers.  Having the wrong information on an invoice will almost always result in delayed payments.  For repeat customer, make sure your produce an invoice with all the information your customer requires.  Find out what specific information your customer needs to process your invoices.  Excluding required data may require your customer to manually process your invoices which always takes more time.  Also, by not provided necessary information may require the customer make a call to your company which can adversely affect your customer relationship.  A good gage of how you are doing in this department is to monitor how many credit memos or adjustments are issued each month.  You will be surprised how improvements in this area will help improve your collections. 

Timely Billing - Don’t wait till tomorrow to bill anything that can be billed today.   When cash is tight, getting somebody to stay a few minutes late to get all the bills out is just good management.  Since many companies disburse payments on a weekly basis, delaying billing just by one day can cost you a week of collection time.  To be most effective, getting your accounting department to understand your key customer payment schedules and synchronize their billing accordingly is critical. 

On-line Payments - Providing systems to encourage your customers to pay on-line payments can be a big boost to cash flow.  While credit cards help, fees involved can impact your profit margins.  With today’s technology, businesses of all sizes are moving their customers to free on-line payment systems that will speed your cash receipts but also save your customers time and avoid making mistakes. 

Involve Your Sales Team - Get your sales team involved in the collection process.  The sales department’s work is not done till the moneys have been collected.  Too many companies make the mistake of turning the collection efforts over to the collection department.  Sales people understand the relation and are best equipped deal with slow payers.  Send a clear message by tying sales commissions to cash receipts not billings.

Communicate, Communicate, Communicate - Establish consistent communications with your customers and your management team.  Communicate from the time order is taken till when the cash is received.   The goal of each call should be to end with a payment commitment date.  Escalate the conversation higher in the organization when calls are not returned or commitments are not met. 

Putting customers on “credit hold” is a very serious decision.  Cutting off services or shipments could have effect throughout your organization.  Make sure your management is on board with a credit hold decision and the customer is notified by the right member of your team. 

Watch Your Customer’s Financial Condition - Watch your customer balance sheets closely.  Financial statements for public companies are available on-line for free.  Asking private companies to provide periodic financial statement is good business practice.  There are also credit organizations that focus your specific industries that can be useful in detecting downward trends.  Ask questions and be prepared to change terms if you see working capital deterioration.

Avoid Cash Discounts - Instead consider offering special pricing to customers who commit to COD and or 7 day terms.   When offered cash discount, too many customers will pay late and still take the discount.  Trying to collect unearned discounts is a big waste of time and resources. 

Get Out of the Accounting Department -  Go visit your major customers. Let them know your face and what you company expects.  People like to pay people they know first.  Having a relationship with your customer’s CFO and CEO can provide a tremendous amount of leverage when developed well in advance of a dispute.