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Your sales personnel also need regular current information to help with the collection process. The word "current" is stressed because the worse thing you can do is have a sales person contact a customer with out-of-date information about their account. A good start is to provide a weekly AR report for each salesman, which includes an aged AR schedule by customer as well as the supporting detail including invoice numbers.

Numerous companies pay their salesmen based on collections and not billing, where only collections that fall within the company guidelines are paid, and those collected past the current guideline fall outside the commission base. While this system can cause problems it certainly keeps the sales staff in the game. Once an invoice gets close to the "fall-off" date, you can bet the salespeople know all about it and are calling to find out what the problem is.

Any new customer that calls for first-time rental needs to complete a proper application and provide information for your credit bureau to check. At this time you also get credit card information. If this customer needs a rental unit before you can get your credit check back, they need to authorize a credit card payment for a weekly rental in case the credit report comes back with a negative response. Only the boss should be authorized to override this policy.

Credits, credits, credits. Probably the #1 reason your receivables are messed up. We all know customers who use this tactic to stall payments, and we allow them to do this and so they continue to do so. The trick here it to get the credits agreed to and issued ASAP without exception, because once you let them sit on the books, your AR balances in the "over 120 days" column are sure to increase. Another negative regarding credits is that if you don't issue them currently, you will keep rehashing the issue over and over because no one remembers what you discussed a month ago. You can spend a lifetime dealing with credits, when you don't have to. Get them resolved and off the books.

At some point in time, every one of you will need a full-time AR person to contact customers, follow up on problems, converse with sales personnel, send documentation, keep track of lien dates and finally get permission to send accounts to collection. Pay plan incentives need to be tied to the total AR balances and balances that fall beyond 90 days from the billing date. Monthly collection goals are also a must. Of course, management needs to monitor these activities to determine if the approach is too strong and is costing the company business. Conversely, if the sales team is involved you will hear about potential problems.