How to Collect on Unpaid Accounts

By Ramon Rocha

The bottom line for accounts receivable is: “Books sold on credit are fictitious until the amount due is collected!” I used to preach this at the publishing house I led.

While traveling this past year for MAI, I heard several Christian publishers cry out that they are facing the problem of rising uncollected accounts receivable. What are the steps publishers can take to manage this important balance sheet item?

MAI President John Maust remembers a publisher in Asia having to fire one of his staff, after overhearing her telephone a deadbeat customer and saying in total exasperation, “If you don’t pay, you’ll be in danger of hell!” Angry statements like this one are commonly heard by debt collectors, but within the Christian community it’s important to approach the situation in a Christ-like manner.

1.   Develop a carefully drawn set of credit policies and practices:
If you already have created policies, review your existing ones. What type of clients qualify for credit?  What is your process for screening customers that are applying for credit? How disciplined are you in enforcing your credit policies?

2.  Age your receivables:
In a spreadsheet, name your credit customers, itemize each invoice amount and  how long the invoice has been past due.  Monitor this report regularly.

3. Make phone calls:
Assign a staff person to  make a friendly phone call to each customer reminding them of debts that are due. Problematic customers get the pleasure of receiving more frequent phone calls. If you are silent and don’t do any follow up calls, the money usually goes just to the “noisier” supplier.

4. The CEO should visit important customers:
There’s nothing like formal, yet friendly visits. Visiting customers makes them feel appreciated, and they will hopefully give priority to paying off your invoices. As a general rule, good customer relations contribute to a good cash flow.

5. Keep money reserves for rough times:
During good years, build up allowances for bad debts. Some customers with unpaid accounts simply vanish. They are Christians, but perhaps their hearts have hardened despite reading Zacchaeus’ story. Pray for them.

In all financial circumstances, may we look to the Lord for provision and wisdom to handle our finances well. Remember to ask: What am I doing to make sure my credit sales are managed properly to ensure I have enough cash to pay my bills on time?  

Find more helpful pointers from Michael Hess’ article at CBS Moneywatch entitled The best way to handle customers who don’t pay.

Do you have any other suggestions? Tell us here.

Photo above courtesy FreeDigitalPhotos, David Castillo Dominici