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More Important Than Ever


Businesses selling and providing services should be paid in a timely manner. In today’s economic climate, it’s more important than ever that a company has effective credit and collection policies in place. It can make the difference between being paid and not being paid.

The following tips will help your organization increase its cash flow while reducing its slow-pay or non-pay accounts.

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Reducing Slow-Pay or Non-Pay Accounts

Help Your Organization Increase Its Cash Flow

One of the unforeseen reasons for a slow-pay or worse yet an account that doesn’t pay at all may be due to the business having not defined to its customers (and employees) the company’s credit policies. Confusion can lead to inaction which means you are at risk of not being paid in a timely fashion, or not paid at all.

Make sure payment schedules, payment dates, penalties for late or non-payment are clearly stated in your contract or agreement, and if applicable make sure it is signed.

Make sure that each employee understands the importance of consistent collection of your accounts. Most companies depend on the timely payment of accounts receivables to survive.

Make sure your employees are able to explain your policies to the customer during the purchase process.

Make sure you have and maintain dependable invoicing and billing systems. Many times, the only reason a customer hasn’t paid is that they never received a bill.

Research reveals that the longer you wait to contact a delinquent account, the less likely you are to collect it all.

Try to contact past due accounts within 10 days, and on a weekly basis thereafter.

Remember: If you aren’t being paid, it’s likely that some other company is. Make sure that the “some other company” is you by calling and following up often.

Be ready to adjust to the situation. Acting quickly and determining that a new payment plan may be wise is better done sooner than later. Be prepared to be flexible and you may keep an account from being non-pay. Slow-pay is better than no-pay at all.

The collectability of an unpaid account drops by 80% after 90 days of in-house collection efforts. If your customer hasn’t paid or responded after 60 days, you should start the process to outsource the account to a third party. They are often able to motivate the customer to pay in ways that you can’t.

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Southwest Recovery Services is a national collection agency with offices in Texas, Oklahoma, Missouri, Ohio, Florida and Georgia.

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