Your objective is profit, not sales volume. Do what it takes to get the customers' cash into your bank account - fast! So, what does it take?
The sections that follow give more details on these points.

Design an attention-grabbing invoice that is better than any you see coming into your own company. 

Keep it brief and clear. Get rid of 'clutter' such as advertising and technical detail - the Invoice is for accounts staff to use.

Invoice within 24 hours of a chargeable event. Remember, nothing happens until your bill gets into the customer's payment process.

DO INCLUDE: payment terms and due date, date, delivery date and method, description, price and total payable and especially the customer order number or payment authorisation - essentials!

Send the Invoice to a named individual. Use FIRST CLASS post to beat customer closing deadlines. Use a courier for very large values.

You cannot expect customers to pay against incorrect invoices - make sure yours are accurate.

An Aged Debt Analysis is the essential working tool for collectors and the best control document for senior management to monitor trends and weaknesses. 

List accounts in order of size - largest debt first.

Computerised Systems - use an open-item version of the statement sent to each account showing all unpaid items - current and overdue - with disputed billings segregated for action.

Manual System - use paper copy statements as above, but change to open-item display as soon as possible (the brought-forward balance method is outdated and generates too many queries).

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Customers generally pay on time, or when chased, or when threatened. 

Sellers must find time to know which are which and deal with them accordingly.

Methods available: VISIT - PHONE - LETTER - FAX.

A Stop-List can also be effective for products in short supply.

Visit the top few major accounts to resolve problems and build relationships while collecting large cheques. Sales staff can be allowed to do this as long as they act promptly.

Phone major accounts in advance of due dates to ensure payments are in process, in time to solve problems before your deadline. Phone all other accounts, working down the list by size of debt, according to time available. MAKE SURE OF ALL LARGE DEBTS BEFORE TELEPHONING SMALL DEBTS. Working in alphabetical or account number order is dangerous.

When contacting your debtors by telephone, it is important to observe the following:

• Be systematic – incorporate phone calls into your collection strategy. A good strategy will timetable appropriate dates for issuing invoices, making phone calls and issuing reminders.
• Be prepared – check that the information relating to the outstanding debt is correct, and that the information is readily available when making the call, i.e. the account number, the credit limit available to the debtor, the invoice date and the balance due.
• Be courteous – remember that every contact your company makes with your customer can add to your existing relationship. A professional but friendly approach can earn your debtor’s respect and cement loyalty.

The BPPG’s telephone collection sheet sets out and prioritises the key information which the credit manager should have to hand when contacting a debtor by telephone and provides space to log responses.
It is important not to log data which contravenes the Data Protection Act 1998
http://www.hmso.gov.uk/acts/acts1998/19980029.htm

Send letters to any overdue accounts too small to telephone. Two standard letters are enough after an Overdue Message on the statement. A polite reminder letter should be enough for customers who 'Pay when Chased'.

For those who only 'Pay when Threatened', a second and Final Demand is needed.

The intervals between the letters depend on company cultures, but 14 days is plenty.

If the Final Demand does not work, its threat must be carried out. Bluffs are soon seen as weakness.

Faxes convey urgency and often beat defensive barriers when letters are being ignored or phone calls diverted. They should be sent to senior people and are more significant when third-party action is mentioned.

Remember - phoning for cash is easily the most effective collection method.

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