On a scale from 1-10 with 10 being “really excited” and 1 being “not so much”, where does the job of calling your customers for money fall…honestly?
During our conversations with dozens of accounts receivable clerks and credit professionals, almost 89% would rather avoid it if they can. Many tell us that they are busy with current customers and just don’t have enough hours in the day to follow up on the slow payers.
As a business owner, I understand the need to service your current customers. What many owners fail to consider is the actual cost of allowing customers to use you as their banker. Let me explain. If you have $500,000.00 in receivables and your Line of Credit cost 4.00%, you must pay $1,666.67 per month in interest costs. There are many other costs such as missed opportunities to put your money back to work etc.
To counter this drain on your profitability, we recommend developing a set of daily, weekly, monthly, and quarterly key performance indicators that your credit and accounts receivable staff can follow. If this checklist system is developed and followed consistently, the return on your investment will be immediate. If you would like to investigate this further, please visit our consulting division at www.creditprocessadvisors.com for a confidential consultation.
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