GPI 351 – Create a detailed and exhaustive list of who, what, when, where and how your customers pay you.

Collecting accounts receivable (bills credit customers owe you) is difficult and takes time. You must locate the accounts payable department, locate their number or website, attempt to speak to the right person and try to resolve a multitude of various issues that seem inevitably to always hold up your company’s monies.

Getting paid sometimes involves jumping many roadblocks.  Some companies issue checks from one central office.  Others have distributed accounts payable functions over multiple sites to issue checks under a defined limit. Others have accounts payable departments only reachable on certain days of the week and through restricted email accounts.  The list of exceptions is long and unique for each of those credit customers which owe you invoices that are now past due. If you are not prepared, you will burn through a lot of time tracking down all of the details. Accounts payable people do not like to answer the telephone because nearly every call is from someone who did not get paid. Because of this, try a different approach.

Run your list of aged accounts and start with the oldest items every week.  Every time you discover the right person assigned to pay you, note the person’s name, telephone number, fax number, personal email address and a name of the alternate who pays you when this person is out of the office.  Keep this listing current in order to speed up the collections effort. Instead of a manual list, try automating the information in your software.

Have your IT department create an automatic client AP contact list that dumps from your software in minutes.  Most accounting software or customer software packages offer the ability to add a number of important people who work for your customer in a type of “contacts” section. This list provides a number of answers. Who are authorized buyers who issue purchase orders?  Who signs delivery tickets in the customer’s receiving department?  Who is the person responsible for entering your invoice into their system so you can get paid in about 30 days?  Enter these key players into your system so you know who to contact to get paid. Teach your employees to submit new names as they emerge during daily transactions; assign the entering of updates to one or two persons that are detail oriented.  Your goal is to maintain an excellent database to contact when funds are not received.

Use your leverage before you sell. Find out first who is going to pay you.  Require AP names when new customers are setup.  You want the AP person’s name at the same time a new customer is added to your system. You as a vendor will never have more leverage than at this time. Ideally you might call them to ensure that you know the billing instructions (i.e. mailed invoices, emailed invoices, invoices added to an online internet billing system for vendors, purchase order copies mandatory, signature and dates from a qualified and limited list of buyers, etc.). Print out the AP contacts by customer and keep it updated every time there is turnover.

Add a customer specific comment code.  All customers are different when collecting cash from them. Some are difficult and others easy. Write down all specific requirements the customers mandate so you can be paid on time. For example, some customers will require a copy of the delivery ticket with the invoice. Another will ask for a copy of their purchase order or some other authorization.  Others will only allow certain company employees to make purchases and will try not to honor those purchases by employees not on that approved buyer list. Whatever these exceptions are, detail them in a type of comment code that accompanies the AP contact list that you work from when performing collections. Do not waste time trying to find out from whom to collect. Find out upfront so you can maximize your collection time.