Past Due Invoices? What Are You Waiting For!

If business people paid as much attention to collecting their money as they do selling their services/products, there would be no need for temporary borrowing because of inadequate cashflow.

It’s no secret that to hold on to past due invoices is not cost effective. Past due invoices rob you of opportunity costs, such as taking advantage of vendor discounts, and of course not incurring interest charges.

When past due accounts become a problem, it’s an indication that your credit and collection policies are inadequate for your business. You have to take a hard look at the credit and collection function and ask yourself, “why are we having a problem collecting our money”.

One way to start the investigation process is to generate an aging report, which shows who is delinquent and for how long. Only then can you take the first step in cleaning out your delinquent accounts. If your organization has not been able to collect past due accounts, then you must forward these accounts to either a collection agency or attorney.

After you have collected a majority of your past due accounts, you now have to revamp you credit and collection department. If you do not know how to accomplish this, outside help will be necessary in restructuring this vital function.

Having learned how to profitably grant credit to your customers, you will not have problems collecting your money. Borrowing money for short-term cashflow needs will be a thing of the past.