Accounting Tips For You

I once had a boss that taught me that the best time to mow the lawn was “just before it needs it”. He said, “if you look out the window and say the grass needs to be cut, it’s too late.” The same is true in the world of accounts receivable management. The best time to place accounts for collection is “just before it needs it”!

Think about it, most of the time when we decide that it’s time to take action it is because we called and the phone was disconnected, or we sent a statement or late notice and it was returned undeliverable. Granted, sometimes a company will close up just days after ordering, but that is really a rare occurrence.

A while back I was given the opportunity to say a few words at a sales meeting, so I proposed the “Johnnie Cochran method of identifying bad accounts”. For those of you that don’t remember Johnnie Cochran during the O.J. Simpson trialcoined the phrase, “If the glove doesn’t fit, you must acquit”. Well, I suggested these two phrases: If the phone is disconnected, it won’t get collected; and, If you have to skip trace it, it’s just too late to place it. As you can imagine, that gainedquite a fewlaughs. But the fact is, if the account isto that point, forget about it.

Now I am not saying that accounts with disconnected phone numbers never get collected. If we never collected accounts that had to be skip-traced, we would not be worth our salt as a collection agency. What I am saying is that companies that use that as a method of determining when to place, get a much lower collections return than companies that have a timeline that they follow most of the time.

Many experts in the field agree that a timeline for accounts receivable needs to be followed in order to maintain positive cash-flow. The exact timeline depends mostly on your terms.Suppose for a moment that your terms are the normal “net-30″, Read more

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As there are many firms that provide these Read more