Collect overdue bills

Acting promptly and decisively is the key to successfully collecting overdue bills. In general, the longer a bill has been outstanding, the harder it is to collect.

A strategy for dealing with past due accounts can simplify collections and help you get paid sooner, and it’s easier and less time-consuming than dealing with past due accounts on a case-by-case basis. Use the sample policy below as a guideline for creating your own. Refer to your policy and act on it when reviewing your A/R Aging Report.

Your policy might have a longer time scale or fewer steps, depending on what's common in your industry. Whatever your plan, you should follow up with late paying customers quickly and repeatedly. In general, the sooner you contact a delinquent customer, the more likely you are to get paid. Use an escalating scale; begin with a friendly attitude and become gradually more insistent and formal in communicating that the customer pays the overdue bills.

Avoid high-cost, low-return collections. Consider the likelihood of recovering the money owed to you, the total amount due, and how much it will cost in payroll and materials to make the money materialize. The best way to reduce these costs is preventative: be proactive by setting up a clear credit policy and using it consistently.

It’s a good idea to keep a record of accounts receivable history, including the actions you’ve taken to collect on a bill. Note when you took the action and the result or customer response. Such a record can support your claims in the event of a lawsuit. But more importantly, it aids your memory and helps you communicate with your customer about the details of their case. If you have more than one overdue account at once, this can be essential to avoid confusion.

See a sample collections policy