01.29.2018 | Posted by Jasmine

Have Past Due Invoices? Check the Mirror.

Internal operational problems manifest themselves in your accounts receivable. If your company’s aging has too many past due invoices, your company is to blame, not your customers.

There are 3 causes of past due invoices, if you’re not being paid on time, take the time to review these aspects of your organization. Fix them and you’ll see an immediate reduction in DSO.


There isn’t one issue that needs to be resolved sooner or more quickly than the others. They are all of equal importance.  Some are easier to resolve than others, but they are all easy to make progress on.  Pick one and improve on it, the improvement in cash flow will be noticeable.

There are problems with your product or service and you’re not resolving the issues  in a timely manner

The majority of past dues are the result of disputes or issues with what you’re selling. Diligently track your disputes, returns and complaints.  Make sure the customer service team understands the importance of resolving these timely.  Everyone understands mistakes are made in business.  There is no excuse for ignoring product or service issues and assuming they are “one offs” and problem customers.  Prove that’s the case, don’t assume it.


You are shipping customers that aren’t creditworthy

Companies come and go and industries are in flux. If you can’t say no to an order, hire an experienced credit manager that can.  Find a way to separate yourself from the revenue and make an objective opinion.  Many times, when you’re being pressured to say “yes” to an order, from internal or external sources, it’s the wrong decision.  Anyone can make the easy approvals and easy declines for credit; the most important decisions are made in the “gray” area.  Make sure your company has a detailed credit review process in place for new and existing customers, stick to it, and you’ll have success.


Your AR collection process is broken

If you have an AR team, they’re not adequately performing or they don’t have a defined process. If you’re not calling your customers when they go past due, that’s on you.  In today’s business environment, you don’t need to have your collection team out in the field with baseball bats, literally or figuratively.  They need to be an extension of your customer service department.  Strong arm tactics don’t work.  Working with customers to get the documents/info required to pay, helping to fix disputes, working out payment plans, and timely reminders will improve your cash flow.  Your customer needs to expect a call from you if they don’t pay their invoice.  Be nice and cordial, but make sure they know you’re watching.


If your company has these issues or questions regarding AR, we’re available to help. A quick discussion might be all it takes to improve the aging and DSO.  Or we can provide you with a comprehensive solution that fits your budget.  We’ve been perfecting the strategy since 1984 and we like to talk receivables.  And most of us are nice, unless we just got off a call with an un-creditworthy customer.