SCORE Small Business Blog

Finance: Receivables and Payables
3 Comments

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Hi. Lately I have been doing a lot of thinking about receivables and payables. If receivables are what customers owe us and payables are what we owe vendors, why are our payables more than receivables lately? And, if receivables are what customers owe us, why don’t they pay us? And if the customers tell us that the economy is down and they need a longer lead time, don’t they realize the economy is down for our businesses also and our vendors are not giving us a longer lead time?

What to do? Is our best customer still our best customer if they don’t pay us?

It’s tough to know when to push and when to comply. My thought is that we need to be firmer at the onset letting the accountant (or whoever is in charge of bill paying) know 60 days is 60 days not 120 days. Isn’t this a chance to confirm the squeaky wheel really does get the oil? Talking directly to the person who pays the bills is important. I have spent useless phone calls talking to the owner getting, “The check is in the mail,” routine when she has only told the accountant to prioritize bill paying. It is our obligation to make it known we are on the top of that priority list.

Any of this sound familiar to you? Let me know how you handled it.

Betty Otte, SCORE Orange County
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Discussion (3) Comment


  1. BettyVisitor

    Hi, Charlie: thank you for your clarification of the receivable concern. You are spot on, but so many small business owners don’t take the time to do the necessary upfront work you are talking about. Is excellent you brought it up as it truly helps emphasize the importance of organized processes from the start.
    Betty

  2. This is all true!!

  3. Betty,

    I have been in the Commercial collection arena for about 20 years. The first thing that must be done is you must do all the upfront work first. The customer has to fill out a credit app and the credit must be checked. You must then have a strict credit policy. At least in today’s world you do. If you have current customers that are doing this to you then I would say that they are not customers. Customers pay their bills. Now once you have exhausted all of your in house procedures you seek a third party agency. If the agency does not collect the money then the account must go to an attorney that will execute a judgment. If can be of any help to you please let me know. Even if I can be of help to you on the phone and helping start a procedure or helping you in anyway let me know.

    Charlie Becker

 

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