Your best bet is always to invoice as early as you can and never let up. If someone has ordered your software, received it, and reneged on their agreement to pay, don't waste time philosophizing. The sooner you accept the situation, the more options you have and the more likely you are to be able to sort the situation out. Never dither; if in doubt, do the following:
1. Call the accounts team together. Using the latest aged debtor list, attack the largest overdue amounts first—typically 10 percent of invoices account for 90 percent of outstanding payments (these are the most useful bills to be paid).
2. Get your accounts department to telephone them and ask for immediate payment. Failing that, ask when the amount will be paid. Depending on your business the phone calls should bring in between 40 and 60 percent of outstanding monies in around seven working days (much of the time, people just need a reminder). The threat of debt collection should collect a further 20 percent.
3. You will now have to confront problem payers. If the time is too long or you don't trust their answer, pass the debt over to a debt collection agency. Do this with all non-strategic debts.
4. If your accounts department is ineffective, find someone who can bring the money in or give the job to a proven collection agency. The money is more important to the firm's survival than individual niceties.
5. Senior management should go through the outstanding debtors list once a week, and the senior financial officer has a duty to blow the whistle on any client of whom they are suspicious. The best day for this is Monday. You can then pursue them right through Friday.
6. Once you start chasing, never let up. Be firm. Be unflinching. Be polite. Remember, it isn't for nothing that professional debt collectors behave like barely restrained terriers trying to savage rabbits through barbed wire. The person who gets paid first isn't always the person who deserves the money most. People at the other end will often pay "Mr. Nasty" ahead of others just to stop the phone calls.
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