In this podcast episode, we discuss several methods for concentrating your collection efforts in order to maximize the amount of cash collected. Key points made are:
The strategy is to pull in the largest amount of cash for the least effort, and in the least amount of time.
Call larger accounts first, then call smaller accounts only if there is extra time left over.
Dump smaller accounts onto a collection agency after relatively minimal collection efforts.
For the largest accounts, contact them before the due date to ensure that the invoice is scheduled for payment, send an aging report to the sales staff, talk to customers about your payment procedures, volunteer to have someone pick up the check, or suggest an ACH debit, or a credit card payment. In short, do whatever it takes to bring in the cash on time.
Log in cash receipts immediately, so that these invoices disappear from the overdue invoice reports seen by the collections staff.
Review the complaints and deductions databases to spot issues that might result in delayed customer payments.
Assign the best collections people to the biggest accounts.
Send issues to other departments if non-payment is caused by them.
Keep small-dollar invoice collections within the accounting department; reserve large issues for other departments.
If nothing else works, send accounts to a collection agency at once, rather than waiting for a prescribed period of time to pass.