Accounts Receivable How To : Identifying Underlying Problems for Improved Results

People want to be honest, but sometimes they avoid difficult questions and tell you what they think you want to hear instead of the truth.  It happens all the time in business. Businesses are representative of the people they employ. A customer that is experiencing financial difficulties is unlikely to tell you that they’re getting ready for a second round of layoffs and they’ve cut back to one shift in production. Instead they say that business is great. One of the nuances of credit and collections management is to identify underlying problems with your customers before they become major issues.

Accounts Receivable How To: What are your customers REALLY saying? Below are just three examples of things customers say or do and what this may really mean.

They say:

“We paid within credit terms”

What It Means:

  1. They know they didn’t pay on time but are unwilling to admit it.
  2. Your invoice and terms are unclear to the customer and they really believe they paid you on time. Consider putting a due date on the invoice in addition to the invoice date and terms.
  3. They mailed the payment on the due date expecting that your credit terms are flexible and allow for postal transit times.

They say:

We didn’t have enough time to process payment.

What it means:

  1. The customer is right, and you didn’t send the invoice soon enough for them to pay you on time.
  2. The customer agreed to shorter credit terms, but due to internal accounts payable processes or lack of organization they are unable to pay within the established terms.
  3. The customer waited until the last minute or forgot to pay the invoice on time.
  4. You don’t enforce your credit terms and the customer has learned that they can wait to pay you only when you call to ask for the payment.

They say:

We didn’t get the invoice?

What it means:

  1. You forgot to enter the sales order or the invoice into the system and they truly didn’t get the invoice.
  2. You entered the sales order or invoice in your accounting system but you failed to send it to them.
  3. You sent them the invoice but it was lost somewhere between your office and theirs, or you sent it to the wrong person or the wrong address.
  4. The invoice was received by the customer but was not delivered to your contact.
  5. They received the invoice but misplaced it.
  6. They received the invoice but are lying about not having it.

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