Collecting those overdue receivables

In recent years, with a depressed economy a number of companies have seen a slow-down in their ability to collect their accounts receivable, not only from small companies with limited cash flow, but also from established businesses that  have piles of cash, but choose to act tough in response to a slow-down in their own receivables collection.   A number of my clients are smaller companies and prompt cash flow is essential to their business, yet the credit control function is often delegated to a junior staff member who has not developed the experience, confidence, and techniques to be effective in this environment. I have found the following to be effective in improving collections

• Remember its all about cash flow. A customer may genuinely have no cash today, but cash will be flowing in and out all the time, and the objective is to ensure that we have priority on the next incoming cash.
• Build a relationship with the AP contact. Be personal and friendly. Sympathize with them over how difficult it must be to manage their payables, explain how you are in the same boat, and need help.  
• Log every collection attempt and let them know that you are logging your efforts. (This information may be used in subsequent dealings).
• Vary your time and day of call, and your method of contact, and, if possible, the phone number you call from so they cannot avoid you.
• Be persistent. Call or email frequently. Eventually they will become embarrassed by their failure to respond. Squeaky wheels do get the grease!
• Ask them to commit to a payment date and follow up as you approach that date.
• Ask for a post-dated check or series of checks. At least you have something and allowing checks to bounce will reflect badly on the Company and the payments clerk.
• Make sure that the account is flagged as a credit hold so no new orders are shipped until the overdue balance is paid.