When cash is limited, customers typically prioritize payments based on their needs, personal relationship with your firm and on your firm’s position towards credit and collections.  At this point, you can’t influence customer needs nor your personal relationship with them, so you may want to re-think your attitude toward credit and collections.

Key points: Continuously remind customers that payment is expected and the consequences for not paying per credit terms.

To accelerate receivables turnover:

• Invoice customers as soon as possible
• Avoid payment delays by making sure invoices include sufficient details and are error free.
• State on invoices early payment discounts along with discount payment due dates and late payment penalty terms.
• Send follow-up statements every 15 days and with accrued service charges.
• Be flexible with payment options;  accept electronic checks, credit or debit cards or any other method that gets you paid faster.

Monitor customer receivables and changes in the average number of days receivables are outstanding.  Sudden changes in a customer’s payment pattern may warn of trouble ahead.  You can find information such as this in the Customer Inquiry History screens in TRAVERSE and OSAS.