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10-22-2004, 04:38 PM
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| Collections: How soon is too soon? In our business, which is a small retail lumber yard, we have found the need to extend credit to certain customers. Our account terms are "Net 10th". I've seen advice stating that you should begin trying to collect what you're owed as soon as possible, either placing a reminder call or sending a reminder letter to the customer 10 - 15 days after the statement due date if it has not been paid by the 10th as was expected. For us, that would be the 20 - 25th of the month, and then the next batch of statements go out on the 1st of the following month. To me, this seems to be "walking a fine line" between angering customers with early collection attempts/reminders, and getting the money that you're owed where it belongs, in your bank account. Anyone have any experience and/or suggestions in this area? It would be appreciated!      |
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10-22-2004, 05:00 PM
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| You should call them on the 11th. |
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10-22-2004, 08:12 PM
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| Actually, the 11th is too early. Wholesale terms generally relate to the POSTMARK date, not the date received. As long as a check is postmarked by the 10th, or the next postal work day if they are not working the 10th, it is considered timely. The same with discounted terms, such as 2% 10th Prox, Net 25th. A postmark on the 10th will qualify for the discount. Calling before the 20th will only cause problems. Depending on previous history with the account, I'd wait as long as the 25th. Certainly before you print your next statement. Keep in mind that once accounts get to 90 days you hardly ever collect them. There are 2 distinct ways of handling in-house accounts - Easy Open & Hard Collection or Hard to Open & Little Collection Needed. Dealing with contractors, you have to understand they sometimes get strung out by their main contractor or builder and you've got to roll with them or lose them. |
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10-22-2004, 08:38 PM
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| I personally beleive when issueiong credit like this to customers, that you need to be fully aware of there cirsumstances and the way there business operates, if you can build repour with them. I personally dislike long account periods, really anything more then 14 days is to long for me. But i do find that it is easier for many businesses to just issue a statement at the end of the month. If you especially have clients that are purchasing on almost a daily basis, then you can do some things to ensure getting timely payment, ask that rather then posting the cheque that there driver(if they have one that is) deop the cheque in when picking up an order, around the time the payment is due. Also if they have there own driver to pick up orders you may want to even stop giving them an order if they are really overdue on a payment. If you are offering good prices and good service, then even some of these little steps to collect money should not cause your client to go elsewhere, but one thing i see in a giving credit is if they arnt going to pay on time then what is the point in having the client anyway, especially if it comes down to they dont pay at all. |
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10-27-2004, 12:44 PM
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| I would tend to agree with Peter - it seems he probably pays his bills & makes sure that the check gets there on or before the date that it is due. And then you have the customers like Pete mentions; the ones that tend to send the check out to you the day that it is due. Most businesses have certain days that they write checks. if you can maybe watch / learn from these dates for each customer, it might be worthwhile. Do you charge interest on open balances? That might be something to do - we used to do that for any account that had not been paid by the 25th. The due date was the 15th. This gave our clients 10 extra days to pay. The 25th was when we created invoices for the next month & that was when interest was calculated.
__________________ Corey Merchant Account Info Merchant Account Promo Toll-Free Voice and Fax Numbers |
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10-29-2004, 01:19 PM
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| are Invoices are due on the 10th of each month and we start making friendly reminder phone calls on the 15th. We make them again on the 22nd. We send past due notites with the next months bill and we start threating collection on the 10th of the following month. Shaun |
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10-31-2004, 11:04 AM
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| Yup to what Peter said, Call them the first day it's late. I am very sales oriented and always assume the sale. In this case I might ask them what time they plan to stop in my office to drop it off, or if I should meet them at a job site later today? I'd be assuming they are paying me today. I am giving them an option to pay me today one way or the other. If I don't get my money by the due date, the next day I send out a letter politely explaining my position and briefly explaining my collection policy, I explain there will be late charges fees at 21 days past due. At that 21 days past due, they get a more serious letter. This second letter explains in greater detail that they must pay within 10 days or I will persue further action, and I state very clearly what that action is. (I have seen further collection letters that are generic and say "to avoid further action".) All the while I call them AT LEAST once a week asking for my money. I might even go ring their door bell and hold out my hand very politely. It's harder to say no to someone's face than it is to their phone call and letter. At 31 days past due my lawyer gets a call, and since I am in the construction business I place a lien on the customer's house. You should have this same right, since you are in the business of selling construction materials. |
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10-31-2004, 01:20 PM
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| A phone call on the 11th isn't going to hurt anything, as long as you handle the situation well. I'd begin with some small talk, and somehow get the conversation to asking if they've received your invoice. That's if you're talking direct to your customer. If you're just talking to someone in the accounting department, it's good enough to come straight out and ask if the invoice is in their system and when it will be paid. |
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11-01-2004, 01:55 AM
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| Yeah peter is right you have to be diplomatic at first... it seriously could have been lost in the mail. Lord knows I have paid people where the check got lost and I have had customers who have been very responsible swear they sent payment. The US postal service isn't GOD. Be polite and curteous on the the 11th day. They are still your customer and there may be a reasonable explanation. Once it gets past a month and you have left several messages and sent several letters, you KNOW they are avoiding you and you no longer have to show the same level of respect IMO. Also keep in mind there are laws governing collections. I do believe in IL I am prohibited from calling more than twice a week and more can't call two days in a row. What garbage, the government protects dead beats. |
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