New Year’s resolutions for the entire year
We have welcomed another year. This means we must be ready for another round of resolutions. Everywhere, businesses have set many goals for the year; some will be attained, others will not. Even with the lack of money, time or resources, at the end of the day organizations have goals that keep them running. Most importantly, it is to continue to provide the services that satisfy their clients needs.
I am sure many companies include their accounts receivables and payables on their “list of things to be improved” during the year. Now, that 2014 is here, I have put together a list of my suggested resolutions for all your receivables and past due accounts.
If you have already accomplished some of these tasks, Congratulations! If not, take note, establish deadlines, and begin work on them immediately. Consider these tasks your New Year’s resolutions.
Establish goals and objectives on your receivables.
To establish objectives and goals in your receivables this year, it is suggested you review last year’s results and take a look at your past due as well as uncollected accounts. I suggest you identify those factors which generated your past due and uncollected accounts when conducting your analysis. Most likely, you will realize these accounts became outstanding due to the lack of credit policies and procedures, useful templates and forms, and established terms to take proper action when granting credit or pursuing collections.
Establish your credit and collections policies and procedures
If your Company is granting credit without clear guidelines or parameters, you will encounter two scenarios: one, you are only selling in cash; and two, you are operating based on your own experience and feelings alone when granting credit or collecting. Doing so is not advisable especially if your Company handles large amounts of cash and you have high volume sales.
Follow your credit policies and procedures
I have noticed over the years that this resolution of sticking to its own company’s credit policies and procedures is the most difficult resolution for executives and owners to keep. You will have lost an enormous amount of time establishing these policies and procedures only to not follow them or allow management to break them. When collecting, these bad habits or lack of self-discipline are at fault.
Review your credit and collections templates and forms
Every year, it is very important to take the time to compile all your templates and forms to review them; not only your standard credit and collections forms but also your most commonly used standard letters or communications. Review each template or form. Gather your credit and collections team and request support from your sales team as well. You will be surprised to see all the improvements you can make when updating your templates and forms.
Establish clear credit and collections time frames
Even when this goal should be incorporated into your credit and collection policies and procedures, I believe it is important you make it a stand-alone goal. When collecting, time is money. Establishing specific time frames in your operation, when granting credit and when collecting on your accounts, will greatly help you to keep satisfied clients by promptly resolving credit applications and reaching optimal levels of receivables.
On your internal collection process, it is advisable to let your clients know via phone or written communication the payment terms and consequences for non-fulfillment. Mostly important is the fact that your clients realize your Company is CONGRUENT with what it says and does. If your terms are to send a client to a legal process when failing to pay within ten days, then follow through. Whatever you have agreed to with your client, make sure you follow through regardless. Otherwise, it will only become an empty threat.
In other words, if you have resolved this New Year to Define, Follow and Act; I am sure this year will be better than the last.
I wish you much success!