Hello SOTGC community,
Have you ever considered at what point you formed each of your opinions and understandings? And when did you last revisit them to see if they have kept pace with your goals and objectives? Have you learned anything lately that might cause you to look at things differently? Does your focal point itself need refinement? Are you using the best technology tools and approach available that may not have been around back in the day?
Taking a close look at some of my own understandings recently has given new life to and energized my entire outlook for 2014. For example this whole going public in a big way is HUGE for me. Both scared and energized. I’m all about the positive so I thought I’d pose a couple thoughts in the area of accounts receivable and see if I might help ignite some similar sparks for someone.
- When was the last time you did a thorough examination of your policies and procedures regarding accounts receivable management?
- Do you offer prompt payment discounts that are almost always taken even without timely payment?
- Are you aware of and following all collection laws? Do you believe you only extend C.O.D. terms but have money owed to you?
Those are just a few of the things a business may want to consider while looking to solidify their financial strength. I’m guessing you may be surprised to learn how much improvement can be accomplished through very minor adjustments.
Last year a very valued, decade plus client of mine made the most minor of changes in their procedures. They started activating our service a whole sum total of two days earlier than in the past. Believe it or not, this little move broke their 10 year collection average by .77%! The shorter time frame did increase their usage cost some but that amount was completely offset by the additional collections. So it cost them Zero dollars to unburden themselves of chasing disrespectful customers sooner, hmmm.
But it really goes so much deeper than that. Those same two days also cut their skips (clients disappearing without a forwarding address) by over 50%!. Based on track record this would have allowed us to deliver another $4,000 at again, no additional cost. Accepted $4,000 is not that much in the grand scheme of things. But have you considered the value of your office staff being freed of chasing just 1/4 of the clients they currently follow up with? Could they provide better customer service, launch a new initiative, train staff, make more sales, or just have time to organize the darn place? Would you like to lower your labor cost by a half a day a week or more?
If two days can make this much difference for one company, it’s possible that a fresh look at your own credit management processes will reveal hidden treasures you never even thought to look for.
To your fiscal health, Colleen Kay