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Financial Management: Collecting receivables, not What is the cost of collecting your accounts receivable? What is the cost of not collecting? Most folks would answer the first question by looking at the time of staffers spent sending statements or calling "slow-pays." Most would answer the second question by looking at their bad debt write-offs. But what about the cost in unnecessary write-offs because your collection effort is too lightweight? We spent almost a year working with a $15 million company trying to dress up their earnings to sell the company. They were saving money by resisting efforts to hire more employees whenever they could. We saved them over $60,000 a month by beefing up their collection department at an added monthly cost of $10,000. Smart, huh? Are you leaving money on the table? If your collection effort is a discretionary slice of your controller’s day, and if your sales exceed $6-8 million annually, and if your losses are greater than 1%, you may be losing money you could recapture more easily than you think, through better credit granting or collection techniques. Call us for more information.
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