Declaring War on Receivables --Dickeson
Is collecting an account receivable a part of the industry definition of commercial printing? If it isn't now, I am declaring it to be. This is an open declaration of WAR on Receivables. When I see that the average of collections is 50 days for a representative group of printers, "I'm madder than hell and I'm not going to take it any more." This is WAR, good buddies. Victory is collection of the account receivable, in full, within the time allowed.
A sale isn't complete until you've got the full cash for the order in your hands.
To win a war, you must have a set of strategies and tactics. The basic strategy is to have a friendly/frank talk with the customer—before you do the job! Have a detailed understanding of when the indebtedness for a job will be paid. If the customer requires more than 30 days, then you must decide whether to be a print supplier or a banker. If you decide to be a banker, then do what a good banker does with credit cards or any other kind of debt.
Have a detailed list of terms of the debt agreement, in writing, with an acceptable and agreed interest rate. That's all well and good, except that nobody does it. Printers aren't bankers and don't want to be in the banking business.
So, it boils down to a good set of collection tactics, doesn't it? Be sure that someone in the company is designated General of the War on Collections; call him/her the GWC. Accountability must clearly rest on his/her shoulders. Don't try to push it off onto "marketing and sales." If you're a small shop, then the GWC may be the CEO, who may also be "marketing and sales." There's no victory until the account is collected in full. Somebody must be in charge of collections. Here are some tactics for the GWC.
1) The invoice goes out by e-mail the day of delivery. Days outstanding starts with the date of the invoice. No excuse is acceptable once you know the "count."
2) Be sure that all charges for customer changes from the original agreement have been agreed upon and documented. If they haven't been, then do not charge for them.
3) Call by phone within three days of invoicing. "Was the shipment in good order? Is there any problem with the order? The invoice? We operate on a tight cash flow here. What day shall I schedule payment of the account? Do you need a hard copy of the invoice for your records?" Take and keep careful note of who said what and when.
4) Send an e-mail of your notes to the person you called.
5) Second, call by phone two days before expected payment. "I have in my notes that you expect to make payment of our invoice the day after tomorrow. Is that still the program?" Again, careful notes of what's said and by whom should be taken. Is it worth all the phoning and note taking? Remember a sale isn't a sale until cash is in the drawer.
6) Be sure to match the language on the invoice with the language on the contract or purchase order that the customer signed.
7) If you don't get payment on the agreed date, call and ask "What happened and why?" Always reply that you'll have someone come and pick up the check.
8) If you can't pick up the check, put the customer on COD terms for the next job.
9) E-mail your complete set of notes of conversations to a slow-paying customer to remind them of verbal promises with a copy to whomever is necessary. Use guilt, not anger.
10) Don't make collection threats until absolutely necessary and then take the action threatened if non-payment continues.
11) Remember that getting the collection is part of "selling" a job.
12) In a phone call, ask for the oldest invoice first.
At all times be patient and don't raise your voice, but be resourceful and tenacious; have a touch of ruthlessness, but with compassion. Never forget that you're "selling" the collection for the job. Don't be afraid of being thought of as a pest.
Take full advantage of e-mail. That's your hold on advanced productivity. Get the e-mail address for the Chief Financial Officer, or the person in charge of paying bills—accounts payable. But don't rely solely on e-mail. There's no substitute for a phone call or even a personal visit, if local, or by the salesman, if remote. Don't be a wimp. Ask for the money. Make sure the customer knows how important money is to you and to the future relationship of your companies.
Get Consumable Cash
By the way, there's no harm in asking for a deposit for the paper, ink and outside purchases for the job. If you get the deposit you'll at least have that important part of the receivable collected—in advance.
Whatever you collect from that point on is a portion internal process value you've added to the raw materials.
With collection you're involved in the process of printing—an entire process—not a one-step operation. Learn to empathize. You granted the credit in the first place so you're in the customer's business—you're a banker/printer—like it or not. It's time for you to put your sleeve guards on and behave like a banker.
It's not necessarily the fault of the CFO that accounts have drifted past normal collection periods. The real fault lies with our monthly general ledger accounting—our intelligence system. Those reports it gives us are artifacts—reconciliation of balance sheets—two weeks after the close of a month.
There isn't a single report that tells us of the aging of our accounts receivable. You have to dig it out by a separate, and somewhat sophisticated, formula. You may think sales are just peachy, that you're doing well—according to the income statement—but you're not doing well. Those rosy sales figures aren't really sales until the money is in the cash drawer.
It's WAR, my friends, War on Receivables. It's time to mobilize. Watch those days on hand for receivables on Monday morning every single, cotton pickin' week. Support your troops. . .er. . .support your General!
--Roger V. Dickeson
About the Author
Roger Dickeson is a printing productivity consultant based in Sylmar, CA. He can be reached via e-mail: rogervd@verizon.net.
