This document provides an overview of strategies for collecting accounts receivable. It discusses setting credit policies, managing the collection process through invoices, letters, and phone calls. It emphasizes the importance of defining customer lifetime value to understand how much can be spent to acquire new customers and retain existing ones. Effective collection strategies can significantly reduce bad debts. The document offers best practices for addressing angry customers and compliance in the collection process.

1. Collecting
Accounts
Receivable
Presented by:
Wade Farquhar

2. Credit policies
What we will cover today:
1
2
3
4
Skips
Collection templates
Payment arrangments5
6
7
Managing energy
Turning receivables into revenue
Compliance

3. • Bad debts range from 3% to
5% of consumer accounts.
• Bad debts range from 2% to
4% of commercial accounts.
• Effective collection strategies
can cut those figures by 50%.

4. Credit Policies.Begin with the end in mind.

5. Mission of the credit department.
CREDIT POLICY PRE-WORK
1
2
3
4
Goals of extending credit.
Responsibility.
Policies and procedures.
5 Payment terms based on cash flow analysis.

6. • Use plain English.
• Statement of interest charges in compliance with
federal guidelines.
• Process for disputing charges.
• Explanation of how your company will review the
creditworthiness of a potential debtor.
CREDIT POLICY ELEMENTS:

7. Insert CTA Header
Sex, race,
national origin,
religion, and
marital status
For more information see the
Equal Opportunity Credit Act

8. Let the paperwork begin…
• Keep it simple – could a 16 year old fill it out?
• The point is to gather information (You are
not required to run a credit check).
• Get complete information; it will come in
handy if you have to track them down later.
• Train your employees… train your
employees.
Credit Application
Tip: Make sure to update this
information annually.

9. Simple is beautiful.
INVOICES
John Doe Acct: #123-45-6789
8/19
Service: Parts
Amount past due: $409.08
Due upon receipt

10. INVOICE ESSENTIALS
Amount that needs to be paid.
How to pay.
When to pay.
Other details you feel are pertinent: date,
number, description of product/services, etc.

11. Get your detective on
FINDING MISSING DEBTORS
Tip: Use social media. Just
because someone doesn’t pay
their invoice doesn’t stop them
from posting vaca photos on
FB.
• Follow leads quickly
• Do not use a hard- driving approach with family and
friends
• Use appropriate language
• Reveal the least amount of information necessary
• Dig deep

12. Make yourself look nicer than
you may be.
SAMPLE LETTERS
Dear Sir/Madame,
I am writing today because I recently became aware that your account is 30
days past due.
Because we value your business I am contacting you so that you do not incur
any further financing charges.
Please let me know if I can be of assistance to you in further resolving this
matter. Thank you.
Sincerely,
_________

13. • To sound smart at the next Chamber meeting.
• To quantify how much each customer is worth.
• To properly train our employees.
• To determine how much we can spend to get new customers.
Why define CLV?

14. CalculateCost
of a
latte:
Lattes
per
year:
# of latte
drinking
years:
Customer
Lifetime
Value:
That’s a lot, eh?
X X =
$4 150 3 $1,800X X =

15. Key Questions
What is your average transaction amount?1
2 How many transactions per year do you average per customer?
For more information see
Customer Centricity
By Peter Fader
What is your average customer retention rate year over year?3

16. Your turnAverage
transactio
n
Transaction
s per year:
Year to
year
retention:
Customer
Lifetime
Value:
X X =
$__ ____ __ yrs. $_____X X =

17. What do we do with this
information?
We train our employees about the value of each and every transaction.1
2 We determine how much to spend on new customer acquisition.
3 We start getting more customers.

18. The Long Tail

19. The Long Tail

20. E-commerce
Thinking in terms of the long tail will drive
business forward.
The New Marketplace
For more information see
Embracing Lifetime Value
From Seth Godin’s blog

21. Referred Customer
Lifetime Value
We now live in a world of networks such as:
•Social media networks (Exs. Facebook,Twitter, Instagram).
•Online location tracking (Ex. Foursquare).
•Online customer feedback (Ex.Yelp!).
From Sales to Customers
Your reputation on Google matters!

22. One feeds the other
Businesses today must consider not only how much their customers will spend with them, but also how
much business they will refer or discourage others from purchasing from them.
Here are some concrete next steps:
•Set up a Facebook company page, and actually use it: Ask your kids to help.
•Follow your customers and ask them to follow you: They tend to repost popular items so don’t worry
about missing one, it will probably be recycled in a few weeks.
•Attend a social media conference or webinar: Begin by figuring out all the things you think you want to
learn.
•Join a paid social media service: Hootsuite, Hubspot, etc.
•Sign up for a training membership: Pick a company with a healthy social media presence.
•Start posting: It doesn’t matter how uncomfortable you are, just do it.
•Sign up for GoogleAnalytics: this will give you a better idea of how you are doing with customers being
referred by your current customers, see what people like about your product/service, and do more of the
same.
CLV and RCLV
For more information I
recommend Hootsuite:
www.Hootsuite.com
It was started by a good
Vancouver boy.

23. What is your favourite
excuse
Common Excuses

24. Best Practices
Pin down the details
Separate excuses from reality
Gain their commitment
Document the activity

25. Define the value of your product/service
MOTIVATEWITH BENEFITS
1
2
3
4
Focus on the customer’s desire to receive your
product/service
Indicate that future receipt of product/services is
currently at risk
Re-iterate your willingness to assist

26. ANGRY CUSTOMERS
ListenL
A
T
T
Acknowledge
Thank
Tell
E Encourage
Thanks a latte!

27. MANAGE
ENERGY…
NOT TIME.

28. COMPLIANCE.

29. IMPORTANTWEBSITES
www.acainternational.org/
www.cdiaonline.org/
www.consumerfinance.gov/
www.insidearm.com/
www.armbriefcase.com/

30. … AND
YOU’RE
DONE!
Thank you