Rose Report: Issue 8

A Guide to Collections Success

issue08-pic-story2Nobody looks forward to collections. There’s just something about asking clients to pay up that’s inherently uncomfortable. But if you put the right process into place, you can easily avoid headaches down the road.

First, change the way you think about collections—the process shouldn’t be viewed as asking for money; rather, it’s simply about understanding when payments are expected to be received. From there, follow these steps and alleviate the anxiety that often accompanies collections.

1. Make sure you have a system in place for documenting all communications with clients about collections. This can be as basic as a Word document or spreadsheet with notes from each phone call, e-mail, and other communication, or you can document these exchanges within your accounting system.

2. When you first send out a bill, make sure it’s properly formatted, including confirming in advance whether the client prefers an electronic or hard copy, or both.

3. After sending out bills, routinely follow up with clients to ensure they’ve received them and that there are no errors or problems.

4. Schedule payments, and confirm that all parties understand the expectations and agree to them. Ensure that you’ve clearly explained the penalties involved in failing to pay on time. (Companies will often add finance charges to the bill in the amount of one to two percent of the total project cost for each month payment is past due.)

5. If a client fails to pay on time, follow up with a phone call to accounting or billing personnel. Simply double-check that the client received the invoice and that they’re aware of the payment schedule.

6. If the accounting department confirms that there are no issues with the invoice, contact the manager overseeing the project, since the issue could be related to cash-flow or something more serious. If the client is unable to pay, you should stop work on the project until new terms can be reached.

7. Finally—don’t stress out! Remember collections are an essential part of keeping your business thriving and growing.