Q: What are three key steps in setting up a good collection policy?
A: Know your customers and their payment history. Be watchful of any changes when you receive payment. A pattern that changes needs attention right away. Don’t let payments get 60 days old. The older the receivable is on the books, the harder it is to collect. Make it a habit to have a weekly accounts receivable list. Know who owes you money and when it is due. If you see clients becoming “slow pay,” call them early and discuss how to stabilize the payment schedule. Work out an arrangement that gets payments started, even if they are making smaller more frequent payments. You need to get that cash flowing into your business. You’ve already provided the service. You’ve earned it.