The Collection of Receivables by Brian CalifanoBrian’s colleague recently shared how high the receivables in his business are — the highest they’ve been in years. When Brian asked him what he did to prevent the inevitable chase for payment, his friend said: I call them up and ask them to pay me, which doesn’t seem to be the best way to solve or prevent this. 

AcceleratingCFO helps their clients establish policies and procedures for every area of their business, including Accounts Receivable (AR). So what are the best practices to ensure collections on a regular basis?

      1. Consistently and Constantly Communicate: Individual emails and phone calls are usually sporadically effective; however, the combination can be a powerful communication tool to both set expectations and ensure there are no surprises. For example, when AcceleratingCFO handles a client’s collections, we customarily bill the day that the goods were delivered or services were rendered. Once services have been rendered, we deploy a process where our client is sending a recurring email two to three weeks after the due date to make sure that the invoice doesn’t slip to the bottom of the pile. After that initial email goes out, and payment has still not been made, we will follow up with a phone call and/or email requesting payment. The communications are not meant to annoy the vendor or customer, but to politely remind. Ignoring a single email or phone call is easier than the regular cadence of both communication avenues. When you set an expectation of  behavior through clear communication, your client/vendor will efficiently pay the bill. 
      2. Have a Script: Some of our clients have enough transactions that warrant an AR team on site or as a third party. In either scenario, scripted answers to common responses is incredibly useful. For example, if a client says, “I will send a check at the end of the week,” a common response could be: Can I follow up on Friday to ensure that the mailing was done?” Or if the client says, “We didn’t receive the bill,” the immediate response could be: Can we validate the email address or should we send it to someone else?” These foreseeable comments can be expected from clients that have not paid their bill. You should be prepared to answer consistently and assertively.
      3. Do a Cost/Benefit Analysis: Despite your best intentions to communicate and follow-up, most business owners should expect that some invoices will never get paid. If there has been no movement or you have been ghosted, the business owner must decide whether to involve outside counsel. Each industry and situation is different; but keep in mind that if you decide to get litigation involved, it will certainly be a timely and expensive process. Ask your accounting team: Is it worth the effort or not? If legal fees supersede the amount of the bill, then pursuing litigation probably does not make sense. However, if the inverse is true or a revenue share agreement is reached, it may be worth hiring outside counsel. Eager for a moral victory? We’d argue that pursuing a victory for victory sake is not smart.

Like any other business process, you need to have strong procedures and protocols for your AR collection process. Managing cash flow is an important part of any business and having a strong AR collection policy will both lower risk and increase cash collections for your business, regardless of industry.

Take-away: If you find your cash collections are more challenging these days and are not sure how to improve your cash collection process, please contact us at

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