It is essential that any business which provides products and services to clients on terms of credit have strategies in place for collecting debts as they fall due. There are three main reasons for this:

  1. Allowing accounts receivable to become significantly overdue can have a strong negative cashflow impact on a business. A business may be paying employees, contractors and suppliers on-time for goods and services, but receiving payment from customers very late, and the normal result of this is cashflow stress and increased business loan balances.
  2. Overdue debts very often become bad debts. A person or business that is heading towards financial difficulty will often seek to improve their cashflow position by paying debts late wherever possible. If you become one of the people they consistently pay late, then when their position becomes such that they stop making payments altogether their debt to you may need to be written-off.
  3. It can actually be good for your business image to gain a reputation for collecting customer accounts on-time. This will often be viewed as an indication of efficiency and professionalism, rather than unreasonableness. The best attitude is to treat the extension of credit terms as a privilege, not a right. Where suppliers extend credit to you, chances are you take the terms of credit seriously, so why should your clients not do the same?

The simplest way to begin following up on overdue accounts receivable is to go to Main then select People & Firms and “View by: Owners with balances”. Click the Total Balance column header to sort by total amount owed per client, and take accounts receivable action one client at a time from top down, starting with the client who owes the most money.

Before continuing, make sure bank reconciliations are up to date so there is no possibility that you may attempt to collect payment on an account which has actually been paid.

  1. If the full amount owed appears in the Current Balance column then no action is required, the customer account is up-to-date.
  2. If amounts appear in any of the in the 30 Day, 60 Day or 90 Day columns then these amounts need to be followed-up and collected.

Click and highlight a customer that you intend to follow-up. Click the Statements button on the right, highlight the most recent owner statement and click view.

Click the Email Report button at the top left to create an e-mail with the owner statement attached in PDF format.

You may now obtain relevant e-mail addresses from the owner record in Ardex. If there is more than one e-mail listed you may send to all.

The e-mail subject may be Overdue Account and your business name, or something similar. The text of the e-mail may be customised depending on the situation, and may take into consideration whether any payments have been received from the client since issuing of the statement.

E-mailing of a statement copy may be followed up by a phone call, and any payment commitments made by the client may be recorded in the Notes tab on the owner record in Ardex. Owner statements may also be printed and faxed and/or mailed where necessary.

Regular follow-up on overdue accounts receivable, and sending owner statement copies is a great way to reduce outstanding debts and bad debts, and it is a good strategy to focus on the largest amounts outstanding first and work down to smaller accounts.

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