Take steps to improve your bottom line by casting a gimlet eye
toward your overdue accounts and by creating an efficient and
comprehensive collection plan, just as Parker did.
"We instituted a flow-chart process indicating what steps
each employee should take for every day the account was overdue 30
days," says Parker. The steps Parker LePla has used range from
simple e-mails from the account executive who handled the client
to, in extreme cases, turning the matter over to an attorney. The
plan was an overwhelming success: Accounts over 90 days old shrank
from $450,000 to $45,000 in just six months.
33%
of fast-growth CEOs said lack of capital could
impede their growth over the next year.
SOURCE:
PricewaterhouseCoopers
|
An effective collection plan should also involve a thorough
review of your accounting system's "front end," such
as checking credit references more carefully and obtaining
comprehensive information about a customer's payment history.
"Look for the red flags at the beginning of the process,"
cautions Baumann. "Due diligence gives you more leverage if
the customer can't or refuses to pay." Baumann advises his
clients to beef up their credit applications and to require a
guarantee of the principals' assets if there is any question
about creditworthiness. A personal guarantee, says Baumann,
"ensures a debtor will take an overdue account
seriously."
Content Continues Below
Originally published in the April 2002 issue of Entrepreneur Magazine
Page
1 | 2 |
3 