A/R's & Cash Flow Issues?

Question

Account Receivables will influence you cash flow to continue with business, but if the A/R's do not come in as stated on the invoice sheet even when you put in 1%-10days net 30. they still decide to wait t=for that 30 and then some. So you try 2% 10 days net 30. No luck Yes I am dealing with the commercial end of my servicing accounts. What other ideas can I utilize.

Small family run business, in the service end. Contractor.

Answer 1

We have done a few things to improve cash collection on AR:

1. Offer a PREPAID cash discount - say 3% or 4%.
2. Hire a compentent collection manager who maintains regular contact with customers (both getting invoices to the customer and contacting them early on to ensure the invoice has been received and processed)
3. Accept credit cards - keep in mind you will give up 2% - 3% to your credit card company
4. Make terms PAYABLE UPON COMPLETION; service personnel don't leave the company premises until they get paid (maybe not practical)

Dealing with cash flow/AR issues is the nature of the beast for being in business - depending on your business, creditworthiness and levels of AR and inventory you can contact your bank for a line of credit backed by you AR or inventory.

Answer 2

We are a healthcare service provider practice. Even though the unique issue of collecting partially from both insurance companies and those served for the same service is an obstacle, we manage by checking on insurance benefits, promptly filing claims, collecting what the insurance is not paying at the time of service, and sending deadbeats to collections. I know that to make a difficult decision to demand payment from customers used to paying slowly or not at all is very nerve racking. You are afraid of losing all your customers and going broke. However, any customer that does not pay you, short pays you, etc. is not a very good customer - and one you can probably do without. Obviously, your business may have significant differences from ours, but I think the problems are universal.

The A/R in any company, regardless of size, has to be managed with the same timeliness, precision and enthusiasm as the primary product or service provided by your company. If you cannot or do not want to manage the A/R, find someone who does. In our experience, the formula of more money and less work is very attractive. Good luck in your endeavors!

Answer 3

First you politely and firmly tell the bums to pay up please. this may not work, especialy if your customer is a government agency.

The next step is to give one of your most delinquent accounts to a collection agency with a nasty reputation. Sure, you'll only get pennies on the dollar for the debt, but you're doing a little advertsing to let your other customers understand what up.

If that doesn't work then insist on a credit card or money order for future business if they're too lazy/cheap to pay on time.