Simple things to improve Cash Collection

I have been working with a number of clients lately where cash management is an issue. I am sure that’s true for every accountant now.

There are so many simple things that make a difference here.

  1. Think before you extend credit.
    Decide if you want to give the customer credit and how much credit you want to give.
    Set limits – on both time and on amount of credit.
    Then if they don’t with within the time or if they have already used up their credit allowance, don’t give anymore credit.
  2. If you are in a sector where Credit is the norm, offer discounts to people who pay up front – make it an attractive option.
  3. If the amount of credit asked for is big, do a credit check.
    Think, how much would it be worth now to know if this customer has a good record.
    If the cost of a credit report is less than that, get the credit report.
  4. Don’t give credit to someone who is already over their limit.
  5. Chase the money when it becomes due.
    In my experience, they who shout loudest get paid.
    So be methodical and keep a log of calls, letters etc
  6. Through it all, be Consistent – if you make a decision, stick to it.

If you have any comments on this article or if there are any areas you would like to address, please do let me know.

Best Wishes

Jim

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