GPI 441 – Publish a list every day of all credit customers with invoices past-due over 90 days.

Watch the customers who have accounts receivable invoice balances over 90 days past-due. This is a critical list of customers who may or may not have serious financial problems and who may or may not ever pay you.  They may come out of the economic down turn affecting your industry and they may not.

The faster your employees (sales, accounts receivable and shipping) can force these customers to make payments, the more likely you will not have write-offs in accounts receivable.

1. Accounts receivable will put the red flag up that a customer has invoices past-due. Word will go out to sales and notice will be entered in the shipping system that no further orders can be shipped due to past-due orders.
2. Sales personnel will notify their respective buyers that no new orders can be taken and no current orders can be shipped until the previous ones now past-due are paid.
3. Shipping will stop any internal order that is already in process at the shipping dock due to the internal system flagging this customer as ON-HOLD.

Try these steps to highlight and target these critical missing invoices.

Actions to take on ‘over 90’ accounts receivable unpaid invoices:

• Report daily: Report the listing to all of the sales personnel daily. Keep these customers’ names in front of sales and collections personnel.
• Call ASAP: Call the customer and ensure they have not made a wire already not recorded or issued a check now lost before stopping shipments.  Call them and ask about the past-due invoices.  When they tell you for certain that they have not paid these amounts, announce to them you are unable to make further shipments on open orders until payment is received.
• Stop shipments: Stop all further shipments until payments are received on this group of customers. You can decide upon the amount to be collected.  Make sure if you trade, collect a substantial amount more than is shipped.
• Update with payments daily: As soon as payments are received on this group of customers, reissue the accounts receivable aged trial balance showing customers’ names, accounts payable contact names, telephone numbers, past-due invoice numbers and dollar amounts.
• Establish credit limits: Set up credit limits for these customers that will stop shipments when an open credit amount limit is reached in your shipment system (halts packing lists). In this case, the customer may very well have all invoices under a certain age but reach the credit limit anyway. The credit limit is set in place initially for the customer and they understand upfront they are in control of this dollar credit limit. All they have to do when they hit the limit is make a payment to drive down their total unpaid dollar amount with your company.