Collections Before the Due Date

This is the first in a series of articles on making credit collections faster and easier.  This article will concentrate on collections before the due date.

The biggest credit collection mistake a company can make is to wait until the debt is past due to begin collections.  A good credit department reduces bad debt and past due accounts by increasing the amount of debts collected before the due date.  The collection of debts is the final step in the sales process and can begin as soon as the debt is incurred.  Here are some ideas to consider for collecting before the due date:

  1. Are your invoices going out on time?  Many customers enter the transaction received date and calculate payment date from there.  If your invoices only go out once a week you could be losing 3-5 days in the collection cycle.
  2. Are terms and due dates prominently featured on your invoice document?  Customers will take the path of least resistance and use default terms if your invoice does not feature the information prominently.  This is especially important if you use multiple terms for different invoices or items with the same customer.  If you have customers that consistently pay late by the same number a days, it may be worth a phone call to their AP department to make sure the terms on your vendor account are accurate and they can locate the terms on the invoice.
  3. Will any of your customers accept invoices electronically to avoid postal costs and delays?  EDI or email invoices can reduce processing time for you and your customer.
  4. Are your invoices going to the right person at the right location to avoid delays in processing?  Sometimes a customer may require an invoice be sent to the location that incurred the debt and other companies use a centralized AP department for all invoices.
  5. Do you know your client's approval process?  This information can help you determine where your invoices are in the process of being paid and possibly change your delivery method or destination to improve the speed of processing.

After your customer has received the invoice, there is still no reason to postpone the collection process until the invoice is past due.  An automated email reminding customers of upcoming payments due or a phone call for larger transactions, may be the difference between an on time payment and one that is 2 weeks late.

Collect-IT can help your credit department start the collection process earlier leading to decreased Days Sales Outstanding and improved cash flow. Collect-IT allows you to easily create and deploy a collection strategy which automates the mundane and labor intensive tasks associated with A/R management such as emailing customers, scheduling phone calls and printing collection letters. Collect-IT has the flexibility to meet your unique business requirements. A user can create a default collection strategy which is uniformly applied across all customers, you can create a customized strategy for a specific customer who may need to be treated differently, or you may use the Opt Out feature to remove a customer from the automated collection strategy entirely.  Call or email us for more information.  sales@dynavistics.com

You may also like

Benefits of Using SSRS Reports ...
on May 23, 2023
business software

Are you a manager using Microsoft Dynamics GP and need better reporting out of your system? Want to ...

Benefits of Using Refreshable ...
on May 16, 2023
business software

Are you a business manager who is using Microsoft Dynamics GP and needs a robust financial ...

Impact of Microsoft Dynamics GP ...
on May 8, 2023
business software

Recently we heard the rumor that GP is no longer being supported beyond 2025, and we are receiving ...

Benefits of Using Microsoft ...
on May 2, 2023
business software

EFT for Payables is an easy way to pay your vendors electronically, rather than printing manual, ...

Benefits of Using Microsoft ...
on April 27, 2023
business software

Microsoft Dynamics GP Electronic Banking feature will increase your ROI. There is a better way to ...

Benefits of Using Microsoft ...
on April 27, 2023
business software

Have you ever had to deal with the headache of handling a fraudulent check drawn on your account? ...