Step Two: The credit manager should place a phone call to customers whose checks have not been received three to four days following the due date and find out when they intend to pay. Meticulous notes should be taken to remind the credit manager what was promised so these notes can be referred to if follow up phone calls are necessary.

Step Three: Using customer contact

Fortunately, few regions of the country use credit as a tool for any other purpose than customer convenience. However, some regions do use credit as a marketing tool. And in others, sometimes dozens of years ago, companies began to allow customers to use them like most professional customers use a bank. And a long history of practices like these are always difficult to eliminate.

Among the ways credit management is generally measured:

• Average accounts receivable collection days.

• Bad debt expense as a percentage of sales.

• Recoveries as a percentage of outstanding balances.

• Turn around time for processing credit applications.

• Service charges collected.

We have good statistics on average collection days, which in the most ideal circumstances run from the high 30s to mid 40s. And many well managed firms are able to hold bad debt expense to under ?% of charge sales.

What is your system in your company? Consistency in following a system is essential to achieving optimal results.

One owner I met recently, has reduced his collection days to the low 30-day range by mailing an invoice to his customers immediately following each delivery. This is somewhat of an unusual system, but it is innovative and it works for him. He says that he is surprised at how many customers pay their invoices upon receipt.

The following is one system that works for many dealers:

Step One: Assign accountability to one person in your business for collections and establish measurable standards for this individual to achieve.

Step Two: The credit manager should place a phone call to customers whose checks have not been received three to four days following the due date and find out when they intend to pay. Meticulous notes should be taken to remind the credit manager what was promised so these notes can be referred to if follow up phone calls are necessary.

Step Three: Using customer contact s

Among the ways credit management is generally measured:

• Average accounts receivable collection days.

• Bad debt expense as a percentage of sales.

• Recoveries as a percentage of outstanding balances.

• Turn around time for processing credit applications.

• Service charges collected.

We have good statistics on average collection days, which in the most ideal circumstances run from the high 30s to mid 40s. And many well managed firms are able to hold bad debt expense to under ?% of charge sales.

What is your system in your company? Consistency in following a system is essential to achieving optimal results.

One owner I met recently, has reduced his collection days to the low 30-day range by mailing an invoice to his customers immediately following each delivery. This is somewhat of an unusual system, but it is innovative and it works for him. He says that he is surprised at how many customers pay their invoices upon receipt.

The following is one system that works for many dealers:

Step One: Assign accountability to one person in your business for collections and establish measurable standards for this individual to achieve.

Step Two: The credit manager should place a phone call to customers whose checks have not been received three to four days following the due date and find out when they intend to pay. Meticulous notes should be taken to remind the credit manager what was promised so these notes can be referred to if follow up phone calls are necessary.

Step Three: Using customer contact

We have good statistics on average collection days, which in the most ideal circumstances run from the high 30s to mid 40s. And many well managed firms are able to hold bad debt expense to under ?% of charge sales.

What is your system in your company? Consistency in following a system is essential to achieving optimal results.

One owner I met recently, has reduced his collection days to the low 30-day range by mailing an invoice to his customers immediately following each delivery. This is somewhat of an unusual system, but it is innovative and it works for him. He says that he is surprised at how many customers pay their invoices upon receipt.

The following is one system that works for many dealers:

Step One: Assign accountability to one person in your business for collections and establish measurable standards for this individual to achieve.

Step Two: The credit manager should place a phone call to customers whose checks have not been received three to four days following the due date and find out when they intend to pay. Meticulous notes should be taken to remind the credit manager what was promised so these notes can be referred to if follow up phone calls are necessary.

Step Three: Using customer contact

The following is one system that works for many dealers:

Step One: Assign accountability to one person in your business for collections and establish measurable standards for this individual to achieve.

Step Two: The credit manager should place a phone call to customers whose checks have not been received three to four days following the due date and find out when they intend to pay. Meticulous notes should be taken to remind the credit manager what was promised so these notes can be referred to if follow up phone calls are necessary.

Step Three: Using customer contact

Step Two: The credit manager should place a phone call to customers whose checks have not been received three to four days following the due date and find out when they intend to pay. Meticulous notes should be taken to remind the credit manager what was promised so these notes can be referred to if follow up phone calls are necessary.

Step Three: Using customer contact software, a calendar box or some other type of follow up system, call the customers who have not done what they promised to do. Past-due customers must know that they cannot get away with merely stalling or holding up payment, so consistent follow up is critical.

Step Four: Visit customers who don’t pay and who don’t live up to their commitments. Find out what is preventing the past-due customer from paying. If the payment is in dispute, find out what sort of concession the customer wants before he is willing to pay up. In collections like in life, it’s the squeaking wheel that often gets the grease. Past-due customers must realize that collecting your accounts receivable is a top priority for you.

Step Five: If you have not already cut accounts off who have not given you a satisfactory response, do so immediately and turn the account over to a third party for collection. Do not take this step, however, without advising the customer that this is your next step. Also make sure you understand and agree with the collections tactics used by the collections firm you choose. Even though it’s a third party, your company will be identified with the outside firm’s tactics.

Step Six: Insist on each past due customer paying service charges. One owner told me recently that he tells his customers this: "I have to pay for capital, so if you don't pay me on time, I have to borrow more money and pay more interest. Unless you can show me someplace I can get capital for free, you're going to have to pay me a service charge when you don't pay your account on time."

The owner or GM should follow up with the credit manager on a pre-determined basis to make sure that he or she is following each step