GPI 061 – Financial statistics – measure past-due accounts receivable invoices / dollars.

How much of your accounts receivable invoices are past due (% of total)?  Post the dollar amount and % of total dollars outstanding on charts each week.  Target everything over 30, 60 days or 90 days or whatever is reasonably considered ‘late’ for your industry.  Run, individually, the accounts that are exceeding this dollar amount or age limit.  Send these past due statements to your customers’ accounts payable personnel and offer to follow up with copies of invoices and proofs of delivery if necessary.  Call these past dues accounts every week because they are signs there are problems with your customer base or worse, with your organization.

There are a lot of reasons why customers pay late.  Not having the funds is only one and generally not the reason why they are holding up your payment.  Here are a few questions to ask when a company is not paying or missing older invoices.  Remember when it comes to companies not paying, it generally stems from someone’s errors and not necessarily customers’ poor cash flow.

Questions for past due accounts receivable accounts:

1. Who are the culprits (past due accounts)?  You define the cutoff but once you do, identify those past due customers, run their details, identify telephone numbers, fax numbers, email addresses for their accounts payable contacts, contact names and then assign enough people to tackle these accounts in order to get through the complete list, minimally once per week, if not more.
2. What are their complaints?  Have you talked to them on the telephone?  In the case of past-due invoices, you can try to collect through emails, statements and faxes, but leaving voicemails and ultimately speaking on the telephone gets to the issue immediately like nothing else.
3. Call them.  Forget all other forms of collection — Talk to them on the telephone.  Call them and tell their receptionist that you will be glad to wait to get ahold of someone to discuss their past due invoices.  If necessary ask for the payables clerk’s supervisor and get a clear answer as to why they are not paying an invoice.  Make sure to leave a voicemail message each time.  Do not waste the call by hanging up.  Be persistent and you will get paid.
4. Why are they holding up monies?  Ask them directly why they have not paid their bill.  Do they need a copy of the invoice or proof of delivery?  Do they need anything supplied by your company’s quality control department?  Be cautious and be very courteous because they may be ready to throw responsibility back into your lap.  Your firm may be at fault so be professional.
5. Is it our company’s fault?  Are they not paying because of quantity shortage, price discrepancy, quality issues, out of specification material or something else?
6. Are they mad at us?  Maybe they are perturbed about shipments they have received that have nothing to do with those for which they are holding up payment.  Some companies stop all payments to  get their vendors attention.  It is important that your sales people get involved to negotiate a settlement with the customer when it comes to rejected parts, problems with products or services poorly performed.  Someone who negotiated the sale initially needs to bring the contracts out and begin the conversation with the customer right away.  The payment issue is secondary to a hidden production problem.
7. What sales representative has called on them recently?  Did anyone follow up with this customer after the last rejection or missed shipment or problem parts that were sent back?  Does this have anything to do with non-payment?  If this does not, what are their payment plans or are they upset or need further sales support?

Past due company accounts receivable invoices normally mean a customer is now upset enough to stop paying you – they may be mad about something.  The only leverage the customer has when he is upset is to stop paying you.  He knows this gets your attention.  This gets everyone’s attention.  Accounting personnel who are informed of product problems need to immediately bring in their quality control personnel (rejected parts) and the assigned sales person to follow up with customers to get problems holding payments resolved.