Poor Records Lead To Poor Collections
Once you have created the account receivable financing, recordkeeping is essential as a basis for invoicing it, tracking it, and, if necessary, sending it out for collection. There are plenty of computer programs available off the shelf, some developed specifically for this industry. But the key is to use them. Even in the computer age, there are too many small businesses that keep sloppy files and lose receivables simply to bad recordkeeping.
In many industries, an invoice is processed as soon as the service is delivered. In others, they are bundled and mailed as much as 30 days later. But I don't recommend either of those approaches to funeral service professionals. Sending the invoice right away is a poor option because it is likely to offend, and also because it is likely to got tossed into the pile of unread mail accumulating at the home of the grieving family. A better approach is to time the mailing of the invoice about seven days after the service has been provided.
It is critical that the invoices be carefully and accurately prepared, both as to the amount owed and any other information that appears on it. Studies have demonstrated that a whopping 80 percent of overage accounts receivable are attributable to invoice mistakes that lead recipients to toss them aside (or not get them at all). Let me give you a personal example:
My father had made pre-need arrangements with a local funeral home. When he died, the bill for an outstanding amount came to me. No problem with that, but it was addressed to my dad, and it distressed and offended me. Why had it happened? When his file was activated, no one bothered to change the mailing address. It may not seem like a big deal, but how much effort would it have taken to change the address to "To the estate of ..." or simply to my name? Little things like that can be critical. One way to make sure invoice information is correct is to place a call report or incident report in a client's file every time you or someone in your firm talks to that client (or about that client) on the phone. Check addresses to keep them current. Verify balances. Attention to detail can streamline the process so that you can reduce that 80 percent and, if necessary, focus on the other, tougher receivables. Collections are the ones that go into the real collection process. It's a four-step process: * Friendly reminders. Preferably a nice, personalized letter to the customer. Keep it short, and make clear that the invoice is overdue. * Firm request. Still in written form, a stronger statement that the invoice is due. The invoices themselves should show how long the bill is overdue (0-30 days, 30-60, etc.). * A demand for payment. This is where you can really turn into a bad guy if you're not careful. It would be a shame if after trying to build loyalty by extending credit in the first place you undo it not only for the delinquent client but for others who hear about - a particular risk in a smaller community.
Account Receivables
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