Many businesses follow some version of the 90-day rule when it comes to delinquent customers – after an invoice(s) is 90 days past due they send it out to collection agency. Turning an account over to a collection agency shouldn't always be a last resort. In fact, some accounts receivable require your immediate attention. When you notice the following warning signs, consider calling a collection agency right away:
• Being ignored;
• Uncooperative; and
• Can’t contact
– your customer continually ignores your collection letters and phone calls.
– your customer tells you that they can’t pay an invoice and won’t work with you to develop a payment schedule.
– you can no longer contact your customer. They've moved and left no forwarding address, they've gone out of business or their phone has been disconnected.
Here are four major points for you to keep in mind:
• There are always red flags;
• Don’t ignore red flags;
• The longer an invoice remains unpaid, the less likely it is that it will be paid; and
• If you own the business, it’s your responsibility to do everything you can to ensure that you get paid for all of your credit sales
When you offer credit sales, getting paid for what you sell is often determined well before the sale occurs.
Keith C. Macdonald, CA