Before you cut, collect
October 22nd, 2008 by Travis Drouin
We have said before that despite the difficult market environment, “hunkering down” may invite even more trouble. While prudence is a virtue, we always believe - in good times or bad - that efficient use of cash and resources is imperative to a successful business. This is a time to be aggressive, not passive, in establishing a position of strength.
However, it must be acknowledged that there will be some adjustment to the times, and one area that companies can address is collections. Before considering cuts that could stall your company’s momentum, be certain that you are collecting on the profits you have already earned.
Here are a few tips on collections from Charlie Colarullo of Transworld Systems, a profit recovery agency:
1. Regularly review all customer accounts and send written demands for accounts that are less than 6 months overdue. If you work with a collection agency, submit past due accounts on a consistent basis to ensure the recovery effort is always in motion.
2. If you use an agency, become familiar with all the reporting tools that are available online and regularly view them to keep up to date on the performance of your account.
3. Use verbal demands for accounts 6 months overdue and beyond.
4. Don’t accept “payment arrangements” on accounts that are in the verbal demands stage. The debtor has already ignored your efforts to collect and written demands, therefore accepting payment arrangements now could only further delay the collection of the debt owed to you.
While it shouldn’t need to be said, please remember to take care of your business by remaining proactive on issues such as collections, business development, marketing and innovation.
Forward thinking activities are the differentiators in an otherwise difficult economy, and will set the stage now for future wealth creation and success. Staying active in these areas will prevent stagnation, because once a business is stalled, it can be difficult to climb back into motion, regardless of market conditions.
