Collection Standards

I have a client that hired me to complete a deep dive into her accounts receivable. She is having a hard time collecting money from her customers. Most of these issues are stemming from her entering invoices incorrectly, entering them and not sending them, and entering the wrong information into them and the customers are confused on what they owe.

How can I help her implement better process to ensure her payments are on time and getting sent?

I have already got her on a schedule of having two people review each invoice and the data entered into it before hitting send but also ensuring they are sent and received.

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  1. 29 Answers

    Create a system & structure for your clients accounts receivable. As you mentioned, you are going to deep dive into her account, with the goal to create an accurate Accounts Receivable Aging Report. This way you can see what’s currently open & past due. Once you have this listing, follow up on those open invoices. I like to send all invoices past due to a customer/vendor and request their plan to pay. I like to start with the customers with the highest balances open. Depending on the type of business your client is in, how much the invoice is for, and how many days past due, you may follow up weekly, or even every other day with a customer. Email is great because you have a trail of the correspondence between the customer. I may send the open invoice(s) today, and if I don’t hear anything in a day or two, I call the customer to make sure they received my email. Sometimes they give me a new email address or party to submit the invoices to. With Accounts Receivable, it’s a good amount of follow up to ensure collections.

    While you are working on getting Accounts Receivable current, create structure your client can implement so their Aging Report remains current, true, and accurate going forward. Document this process for the team. (Flow charts can work well here.) Then, review the full process with the team, from creating, entering & sending an invoice, to receiving partial and/or full payment. Many times, vendors only pay a portion of in invoice, and you want to be sure the invoice stays open for follow up. Teach your client and team to utilize the Accounts Receivable Aging Report as a tool. Someone on the team should be responsible for following up once an invoice is past due. Make sure someone on the team is responsible for reviewing & following up on open invoices on a frequent basis (this might be weekly). If the team really has trouble, sit with them and have it be a hands on experience where you are guiding them through this process from beginning to end. (I find handholding works well in when implementing a new process with a client, since you’re helping them real time and they can ask questions, or you can see that they are just not executing the process.)

    Aside from ensuring invoices are actually sent out, another idea to speed up collection, is to offer an early payment discount or offering a payment plan.

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