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Mountain States Commercial Credit Management – elevated credit and collection services since 1988. Call us to improve your cash flow.    800-457-8244

To Get More On-Time Payments, Make Collections a Priority

Woman staring at computer screen

Have you ever procrastinated on a work task — even if it was important? We’re guilty, too. Procrastinating is common, especially with tasks we don’t like. All kinds of theories seek to explain why, but chances are it’s not because you’re lazy. Many researchers believe there are underlying psychological reasons1 for avoiding certain tasks: We fear failure, we dislike operating outside our comfort zones, or the task in question is just boring.

Psychology aside, there are some tasks we just can’t avoid. One of the job duties many business owners and managers dislike the most is collections.

Sending out invoices and receiving payments tends to be routine. But many people put off the important task of confronting customers who are late with payments. Those collections calls can be awkward, but putting them off only makes the problem worse. The longer you wait to collect, the harder it becomes.

Collecting past-due payments must be a priority

Finding ways to make collections a part of your everyday work process will help you get organized and stay ahead of your cash flow. When you break this task down into easier-to-manage steps, it won’t feel quite as painful and you’ll be less likely to put it off.

These best practices will help simplify the collections process and keep you from procrastinating.

  1. Establish a well-defined policy for collections. If you know exactly when accounts must be paid and those rules are clearly communicated to your customers, they will be more likely to pay on time. If they don’t, you’ll know when to begin the collections process.
  2. Send invoices regularly. It’s easier to keep on top of collections if your books are up to date to begin with. Send your statements at regular intervals so everything is current.
  3. Keep good records. Record when invoices go out and payments come in. Document when and how often you contact past-due accounts. With a clear record, you’ll be able to easily determine where each account stands and what needs to be done.
  4. Use your records, not feelings. If an account is overdue according to your policy and records, begin the collections process. Don’t put it off because you feel uncomfortable or would rather not deal with it. The longer you wait, the harder it will be.
  5. Contact your customers personally. If you have clients who have unpaid bills, contact them and follow up regularly (within all collections laws). It’s possible they may not know payments are overdue or they have forgotten to send payments.
  6. Use a third party. If you’ve done all you can but the account is still not paid, consider engaging a third party to help you collect. A professional and reliable partner will relieve the burden of collections and will free up your time to work on other projects.
  7. Set expectations. Realize that despite your best efforts, not every past-due payment will be collected. Identify the accounts that are unlikely to pay early and save your time and energy for accounts you can realistically settle.

Put in place a collections system that works for you and your business — and stick to it, even if you’d really rather put it off. Once you get in the groove and stay on top of this side of your business, collections won’t be such a headache. You may even find you’re less likely to procrastinate!

We are always available to answer any questions or assist with a collection. Please call us at 800-457-8244, fax us at 303-806-5360, or send a request through our website.

1 Business Insider, 2015. “You aren’t just lazy — These 7 psychological theories explain why you procrastinate.” http://www.businessinsider.com/psychological-reasons-you-procrastinate-2015-7

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