Past Due: Collections Made Easy

Let‘s face it, no one likes to collect on past due accounts. Unfortunately, no matter what business you are in, you will always have a few past due accounts.

In all but two of my office positions, I have been responsible for collecting on past due accounts. While this task will never rate in the top 10 of tasks that you love to do, there are a few simple steps that you can take to make the collection process easier.

Statements

First, if your company does not already send out statements, begin immediately. Most accounting software packages allow you to generate statements. If your accounting package does not contain a statement function; you can easily create a template in excel or other spreadsheet software. While this may seem time consuming, you would be surprised how many companies wait to compare the invoices to the statements.

Once you have the statements run; go through them and highlight past due items, the bolder the highlighter the better. Include a handwritten note about the length of time past due, or notations to pay immediately. I generally include a copy of the invoice stapled to the statement to prevent the inevitable call from the client claiming they never received the original invoice.

Consistency is the key with statements. You have to run them at the same time every month. Otherwise, clients will complain they would have paid, if only they had received your statement (never mind the fact you sent them an invoice at the time of service).

To save on postage and to speed up the receipt of payments; feel free to fax or even scan and email the statement to the client. Faxing works especially well, no one likes to have a collections letter lying in the fax tray for all to see.

Calling on Collection Accounts

Even with statements being sent out on a routine basis you may still have clients that require a follow up call. Just remember these calls do not have to be aggressive, you are simply calling to ask if they have paid the invoice. If for some reason they have not received it, you are more than happy to send a copy right over.

For me, good organization is the key to making the collection calling process as painless as possible. I have found having all the past due invoices for each client I am going to call right on the desk makes it easy to answer all the questions a client may have. Then if they request it, I can send the copy right over to them.

Be sure to make notes about who you spoke to, and what they said. This will give you a sense of who is perpetually stalling or who has a very disorganized accounts payable department.

As a rule, I generally try to make all my collection calls in the afternoons. A lot of time I simply leave a detailed message on their voicemail. This actually works quite well; they have all the information necessary to cut the check. Very few call to say the check is in the mail, usually they will only call back if they need a copy of the invoice.

When you do end up speaking with a client who is stalling you, yet again, do not hesitate to mention that you are being pressured to collect the account (whether it is true or not). Let them know you hate pestering them, but that you will keep pestering until they pay.

In business it does seem that the squeaky wheel gets the grease. If a business is struggling they most definitely will hold off paying accounts that don't call to collect on the past due invoices.

Strongly Worded Collection Letter

If the statements and phone calls do not generate payment you may be forced to write a collection letter. The goal of the letter is to give the past due customer one last chance before you take them to court. Only you can decide if you will ever take them to court or if eventually you will write it off as uncollectible. The idea is for the client to think you will take them to court.

In the letter give the past due client an approximate date in which the payment must be received. Be sure to include all copies of the invoices, note any previous conversations you have had regarding the account or attach any other correspondence regarding the account. This letter is very effective, but should be used sparingly.

While these tips are simple, they are effective. Once you have a reputation of persistently chasing your past due accounts, you will find your clients paying you in a timely fashion.