Apr/May 2009 – A/R Strategy Checklist

A/R Strategy Checklist

Following is a list of items that once included in your business plan will greatly reduce the number of past due customers and most importantly reduce the volume of write-offs to bad debt.

When you are negotiating with or quoting a customer:

  • Clearly advise the customer when payment is required.
  • Gain their agreement as to when payment is due.

When you take the order:

  • Acknowledge the order in writing, emphasizing payment terms.

If the customer is new:

  • Obtain a credit application form.
  • Check payment reliability and solvency with other trade creditors.
  • Send a New Account Welcome letter stressing account payment terms.

When the goods are delivered or the services supplied:

  • Obtain a signed proof of delivery or work completion note.
  • Ensure your invoice includes the customer purchase order number or other reference.
  • Invoice within 24 hours of delivery/supply, stressing the due date.
  • Send a monthly statement of account.

When collecting unpaid accounts:

  • Have a daily display of past due accounts.
  • Apply specific resources to follow-up on delinquent accounts.
  • Visit or telephone all large accounts.
  • Develop an effective letter campaign for small balance accounts.
  • Utilize fax and email as a communication method when customers are avoiding you.
  • Establish a clear policy to stop supplying slow paying customers. ü Establish a timetable for collecting with defined steps at stated intervals, including the referral to a third-party for non-paying customers.

If you are a director or owner:

  • Monitor daily collections and correct bad trends promptly.
  • Devote skilled time, including your own, to collections.

From Author Alan Lakein "How to Get Control of Your Time and Your Life" (1973):
“In all planning you make a list and you set priorities.”
…Some food for thought. Make a list.

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