The balance in Accounts Receivable at the end of each month is a telling number.  It is one of the key items that determines whether your business has any cash to spend.  And  should included accounts end up being non-collectible, they can take a big bite out of your profits for the year. 

So how to stay on top of this account?

Here are some suggestions:

 1. Measure - DSO, average days to pay and look for changes in trends
 2. Monitor - watch for balances by customer, including year over year sales comparisons for each customer
 3. Review your qualification process for adding new accounts - are you performing credit checks on new accounts?
 4. Look at your dispute resolution and error handling processes- inaccuracies in Order Entry are common causes of slow payment.
 5. Consider expanding your acceptable payment types - do you take credit cards or PayPal for example? Have you looked at onsite deposit processing systems like Heartland Express Funds?

 And if you really want to improve collectibility, you might consider contacting your customers before their payments are due, creating a customer portal where they can answer many of their own invoicing questions, and building in an automated process of communication.  Or you could implement a solution like www.cashcollector.com which does all of this for you. 
 

I was an employee of a software company.  I was in charge of Product Marketing for our ERP solution and my boss assigned me a special project.  The year-long assignment was to put together a team of people who could help move our DOS software customers to our current Windows product.  These faithful DOS customers had been using our product for more than 10 years without support, so this was not going to be an easy task. 

I was fortunate to have help from almost every department in the company and the support of our partners -we had a ball designing campaigns and coming up with a different twist for each quarter.   But here's where the cool part comes in.  The wonderful thing about the project was that we had an assigned unit objective and a way to see our performance against that goal. And we had complete control over a number of variables that impacted our ability to achieve the goal.  It was the perfect job- reasonable goals, with the right tools, measurable outcomes, and access to all of the people who would impact our ability to hit the target.  We designed special quarterly promotions, had a dedicated website, and got the job done.  I could run a report every single day and watch the results of any campaign or promotion.  And as the results rolled in, I could keep everyone informed of our progress. 

As you move up in an organization, the measurable, achievable stuff is few and far between.  Often you are given assignments and responsibilities with no way to really impact the outcomes.  Or you are given goals and can't monitor your progress against them.  Or maybe you know the variables, but you don't have the resources you need to change them.  You are assigned a target by someone in another country and then try your darndest to hit it.  But you don't really get much satisfaction out of the effort - whether you win or lose.

Wouldn't it be great if we could give everyone in every company accountability, the resources they need to get the job done, access to great tools, buyin from others who have a stake in the outcome, and measurable quarterly targets?  

I know what it feels like to watch the numbers exceed the target, quarter after quarter.  And to know that you made an impact. Those are the best days.  Every day should be like that.