What’s solar energy got to do with bad debt?

March 15, 9:59 AM Seattle Credit and Collections Examiner Debie Batterson

Have you ever noticed how energizing the sun is; especially in sun deprived cities like Seattle? When that magical yellow orb finally makes its debut, most of us find ourselves chomping at the bit and in the spring cleaning mode!

Today the question is does that urge to clean spill over to your business? Severe weather, holidays, and vacations are all factors that may have your Accountant, CFO, and/or Controller singing the winter blues. Many businesses find the winter to be harsh and damaging to their bottom line, so here are some spring cleaning tips to spit shine even the dingiest aging.

1. A lot of businesses don’t get around to making collections calls on their small balances. You may be missing out on some easy revenue! Instead of sorting your aging high dollar from top down, try the opposite. Sort your “total balance” column “ascending.” Next, sort your oldest balances first. If you have an in-house collections team, try planning a team blitz on small balances. For the blitz set them up a call campaign with a specific goal in mind. It should be “all hands on deck” until the team goal is met. After the blitz is over set a 30-day reminder to write off any small balance that didn’t get paid during the blitz. Last, send them on to your 3rd party collections agency.

2. Consider giving your slow paying customers an incentive to get their accounts paid up and in good standing. For instance, you could offer a few dollars off the balance if they pay today. Explain that this is a one-time offer in order to clean up your aging. You may also consider discounting a future service or product to entice dispute resolution and payment.

3. Another effective strategy is: Every time you find yourself in conversation with a client ask them this question: “What can I do today to move my invoice to the top of your pile?” You will be amazed at the responses and the vital information you will get with that simple question. Often you will find out the delay in payment is a simple billing error on your part, such as sending the bill to the wrong person, or a typo in the billing address.

4. Another way to clean up your aging in a hurry is to resolve billing disputes. Ask your customer, “What amount are you disputing?” If it’s any amount other than the full balance let them know you expect payment on the undisputed portion today. If you can resolve the dispute real time, then do so. If you can’t, or if you think their dispute may be valid, suggest a possible settlement to resolve the issue. Remember to start high and know where you bottom line is before you start negotiating.

There you have it, four tried and true tips on how to dust off your dreary aging. These tips can be put to immediate use, and you will see immediate results. If you spend one to two weeks implementing these strategies your efforts will pay off in a big way. Your aging will shine, and so will your bottom line!