Accounts Receivable (3 of 4): Speeding Collections - John M. Leask II CPA/ABV, CVA

Accounts Receivable

Part 3 of a 4 part series

Warning Signs:

    • Receivables exceed 50 days outstanding.
    • Days receivables outstanding increases significantly.

  • Significant decrease in sales/receivables.


  • Get advances, deposits, progress payments whenever possible.
  • Bill before or soon after delivering goods or rendering service.
  • Shorten the time between placing the order and the shipping date.
  • Shorten the time between shipping date and date the customer gets the invoice.
  • Ask your customers to pay by invoice rather than by statement.
  • Use stamped pre-addressed envelopes to speed payments.
  • Resolve customer-billing disputes promptly.
  • Actively pursue collection using written policy enforced consistently.
  • Test actual implementation of collection policies looking for improvement.
  • Shore up listless collection policies.
  • Hold customers to payment terms to earn discounts.
  • Charge interest on delinquent accounts.
  • Use fax machine to speed collections and trim expenses.
  • Start sending out semi-monthly statements.
  • Collect cash where you can be wire transfer and e-mail.
  • Use third party credit (credit cards, direct finance) instead of house credit if you can.
  • Utilize major credit cards rather than open accounts where practical.

Back to The Business Doctor

>>Accounts Receivable (1 of 4): Control
>>Accounts Receivable (2 of 4): Extending Credit
>>Accounts Receivable (3 of 4): Speeding Collections
>>Accounts Receivable (4 of 4): Handling Difficult Collections