You Have The Power To Change Things

If account receivable factoring company makes sense, you probably have the policy you want. If it doesn't, or if you haven't put your understanding into practice, we have some work to do. To put the situation bluntly, you cause your collection problems, not your customers! The good news is that because you are the cause, you have the power to change things. Granted, this will be easier with new customers than with established ones. Still, there are excellent ways of educating current customers to a clearer way of doing business.

In business, you will win more by being willing to lose a few. The ones you lose are those customers you are better off without. As your payment policies and implementing procedures become clearer, you will actually build the business faster and better. Mixed messages will be gone, the rules of the game will be made clear prior to doing business, which makes sense. When it comes to money, no one wants to be told something after the fact - when they could have been told about ahead of time. In other words, no surprises. That is the theme that we will use to revamp your payment policies, to do business the way you want and to convert accounts receivable into cash.

This is a project that deserves high priority because each excessive day of outstanding receivables that are eliminated can represent an awesome amount of money that goes right to the bottom line.

What can you do about it? In order to correct the problems described above, we have to focus on two aspects. The first and easiest is to prevent future payment problems. The second aspect concerns the policies and procedures for recovering the majority of current receivables, at the lowest cost.

An Ounce of Prevention A detailed, unambiguous policy on how you want your customers to pay you must be spelled out clearly in writing. This document will require top management involvement and approval, because the policy must resolve the often competing interests of sales and credit. The policy will include how much credit, if any, is given and under what circumstances. Depending on your business and industry, there may be certain predictable variations and changes that occur, in which the method of handling payment for those conditions is also addressed.

I never tell any company what their policy should be, because that is a personal or corporate policy matter. What I suggest is that you have a policy. I also contribute the elements of it. The specifics are up to you. Most of the policy is made available to customers prior to doing business, whenever possible. This step is crucial. If your customers don't like your policy, you want to know ahead of time so that you can decide how much credit to give or if you want to do business with them at all.

Account Receivables