Collections: Start Early—Even With Your Best Clients

By Andrew Paparozzi
In March 9, 2009

If your receivables are stretching out you aren’t alone.

The figure below tracks receivables days outstanding for 24 NAPL Performance Indicators participants on a three-month moving average. Through most of 2008 receivables fell nicely, with the three-month average dropping from 51.1 days in January to 45.7 days in June and to 42.5 days in Collections October.

But all that changed when the   recession deepened dramatically last fall. By the end of November receivables were back up to 44.9 days. And by the end of December they were up to 45.9 days.

What do we do? Susan Rausch, director of corporate credit and collections, Mackay Mitchell Envelope Company, has several helpful suggestions. Among them: Call one day after the invoice is beyond terms even for established clients with good payment histories. Ms. Rausch emphasizes that calling early:

• Reinforces that you are on top of collections and expect to be paid according to terms. 

• Helps distinguish between customers who are able to pay within term and those who aren’t so you know where to focus collection efforts.

• Identifies the real reason for non-payment. Maybe it’s just an error on the invoice—a missing information or the wrong PO number, for example—that can be resolved immediately. “Why wait another month for easy pickings?”

The call at 30 days should be an “administrative” rather than a “collections” call—you’re asking about the problem and reinforcing that you want to help, not just collect. And never, Ms. Rauch urges, leave collections at “they're a good customer—just leave them alone and let them pay when they can!”

Sources/Additional Information:

  1. Best Practices: Collections, Susan Rausch, www.allbusiness.com
  2. Choosing Not to Participate in the Recession, NAPL, free download, www.napl.org
  3. Finding Opportunity in the Recession, NAPL, free download, www.napl.org
  4. Printing Business Conditions, NAPL, February 2009, call 1-800-642-6275, ext. 4.

 

Andrew Paparozzi

Epicomm's Andrew Paparozzi, Vice President/Chief Economist, is well-known for his accurate and thoughtful discussions on the economy and US commercial printing industry. A foremost author and speaker on economic business trends in the printing industry, Paparozzi heads Epicomm's Printing Economic Research Center.

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