Issue link: https://read.dmtmag.com/i/110301
30 ��� MARCH 2013 ��� WORLD FENCE NEWS As I mentioned in last month���s column and in my presentations at the Garden State AFA Jackpot trade show in Atlantic City in January, excessive outstanding accounts receivable will sink any company. The best assurance that you will get paid when the job is complete is the one that addresses collections at the earliest possible stage and is consistent and thorough in dealing with past due accounts. Slow paying customers create significant cash flow problems as well as costing the company time and money to make the collection, not to mention possible interest expense on borrowed working capital. And obviously, ���no pay��� customers create total havoc. Regardless of the profitability of the sale, if the company fails to collect, you lose the Sell it, erect it, collect it ��� The best A/R collections system ��� period! BY TOM LUBY, PROFIT BUILDERS INTERNATIONAL cost of the labor and materials, not to mention your overhead contribution from that job. Effective collection procedures begin well before the bill is due and payable. The elimination of problems before the payment due day will greatly enhance the ability of the company to be paid on time. This is very important to remember. Collection procedures must be based on persistent and constant follow-up with a mixture of controls that become increasingly severe. (It should be noted that the collector should never threaten to initiate legal action unless you intend to follow through.) Principles of good credit and collection The following points illustrate the principle elements of any good collection policy. ��� Timely billing (daily) to the customer with well-defined payment terms. ��� Preparation and review of a weekly accounts receivable aging list. ��� Persistent follow-up using standardized collection procedures. Dear Industry Friends, Despite the devastation that Super Storm Sandy dealt to our lives, we are tough Northeasterners and will not be beaten. We are currently in operation, taking and shipping orders as usual. Please call and let us serve you. ��� Mike Levy NMI President At National Metal, we are devoted to our valued customers no matter what! Despite some storm damage we are currently taking and filling orders! Super Storm Sandy is gone and we are still standing! Super Storm Sandy is gone and we are still standing! Poor follow through on collections can wipe out good sales efforts and excellent performances by both your sales personnel and your crews. Poor collection procedures also add to all costs incurred and must be accounted for in the cost of other sales. Payment terms will vary among your customers, especially between commercial and residential accounts; therefore, each situation and circumstance should be addressed separately in your collections procedures. The collection procedure should involve not only the sales staff, but also the crew foreman on residential jobs, management and office personnel. Remember, your invoice or statement must be thorough and include every detail, just in case questions arise after the job is complete. Initial collection procedure for commercial fence accounts The initial collection procedure is quite different between commercial and residential customers, so I will address each separately. Once the account is in the system there are then many similarities in how it is handled. This procedure will review each. For commercial accounts the collection procedure begins prior even to the bid review, with a determination by management on the credit worthiness of the GC or developer. If the commercial account is deemed too risky, you may be better served not to even submit a bid. If the commercial account is determined to be credit worthy, upon a successful bid and acceptance of the contract, current credit information must be on file and updated as needed. Naturally, for most government, state and many larger commercial jobs a payment and performance bond may be required to assure the work will be completed according to specs, and that you will be paid. But as many of you already know, that still does not guarantee payment, and collecting good credit info is still a necessity. The credit file must include all pertinent information about the account. Customer name, address, telephone number, e-mail if available, and terms must be recorded. Obtaining a D&B credit rating is advisable, and verification of the ability to charge (and who is authorized) must be noted. Once the contract is signed, the materials have been ordered and work has begun, do not be afraid to mail invoices early. That way the person in charge has plenty of time to plan to allocate payment. Don���t wait until the last minute, or even worse, until the account is past due to take action. continued on page 32