To truly get the most out of your credit and collections management, you first need to get to know your business from top to bottom. Figure out who your customers are and what type of industry you are serving, as well as what industry category your business fits in. Second, you need to identify your credit and collections management problems. Pick a few to start tackling and fixing, don’t try to fix them all at once with a general solution. Once you have been through the first two phases, you’re ready to get to step three of credit and collections management. This is where the real hard work begins.

Step three of credit and collections management is actually fixing the problems you’ve identified. These can be done in a variety of ways, but we will highlight some of the big solutions for you.

SET CREDIT AND COLLECTIONS MANAGEMENT POLICIES

Your accounting team should have general policies in place to ensure that invoices are going out correctly. If certain important information is left out such as purchase orders or addressed incorrectly it will likely not get paid. One way to battle this with a policy is by having someone review all invoices past due on the day they are due to double check the right information was passed on. Further, for all big number invoices have a policy that they must be reviewed before they are sent out. The last invoice you want to be late are your big ticket invoices.

SEND INVOICES SOONER

The faster you get the invoice to your customer, the faster they will pay it. This tactic will also let customers know that you are serious about getting paid. Companies that lag behind on their invoicing timelines are typically seen by customers as the least worrisome among outstanding payments. Have a schedule in places for sending out invoices, such as once a week or X number of days after the service was provided.

REMIND CUSTOMERS TO PAY

You can tackle this solution in two different ways, or implement both. The first is to remind customers, by sending out an email or making a phone, that their invoice is due in 3-5 days. The other tactic is to make reminder phone calls once the invoice goes past due. Most companies will say they don’t have time for this, but if you use an accounts receivable software that can prioritize these actions for you, it will be a lot easier.

SET GOALS

Going into the process of fixing your credit and collections management practices is useless if you don’t set a goal to achieve. The best one to look forward to is decreasing the amount of time to get paid. During your research you should have discovered what your current days sales outstanding are, make a modest goal to decrease that. This is another area that an accounts receivable software would come in hand, most systems are proven to improve faster payments by 20 percent or 12 days

Now you should have all the tools needed to start tackling your credit and collections management. Although these fixes will definitely improve how long it takes to get paid, make sure you are doing the research first. The more you know about yourself and your business, the better off you will be to start getting paid faster.

Want the whole story, step-by-step?
Check out our full guide here.