Agree terms before the first invoice
Most late payment starts with a vague agreement. Write the payment term down when the customer’s account is opened, put it on every invoice, and make sure the due date is printed, not left for the customer to work out. A customer who knows the date is easier to hold to it.
TipAgree who at the customer pays, and how, by name when you open the account; chasing starts faster when you know whom to call.
Know who owes what, every week
Run an aging of receivables every week, by due date rather than invoice date. It groups what each customer owes into current and past-due buckets, and tells you where to spend the week’s calls. Sort by the oldest bucket, not the largest balance: a big current balance is less urgent than a small one two months late.
Follow up on a fixed rhythm
Collection works best as a routine, not a crisis: the same steps, at the same points, for every customer, so nobody is singled out and nobody is forgotten.
- A few days before the due date, confirm the invoice arrived and is agreed
- On the due date, a short call or message
- At 7 days past due, a call from the person who owns the account
- At 30 days, the rep collects on the next visit and new orders wait for approval
- At 60 days, a meeting with the owner and a written payment plan
TipThe call before the due date is the most useful one; it surfaces disputes while there is still time to fix them.
Make paying easy
Every obstacle between the customer and the payment delays it. Let the rep collect at the visit, in cash, by card or by transfer, and record each payment against the invoices it pays on the spot. A payment left unapplied makes the customer look late when they are not, and spoils your aging.
Bring the statement to the visit. A shop owner who sees the invoices, the payments and the balance on one page pays faster than one who is told a number.
Settle disputes quickly
A disputed invoice is not paid, however often you chase it. Short deliveries, damaged goods, a price that differed from the list: each should become a return or a credit note quickly, so the balance you chase is the balance the customer agrees.
Keep a note on every dispute: who raised it, what it is about, and who will close it. A dispute nobody owns can sit for months.
- Short or damaged deliveries
- A price different from the agreed list
- A return taken back but not credited
- A payment made but not applied
Use holds carefully
Stopping supply is the strongest tool you have, and the one most likely to lose a customer. Use it as a step in the rhythm, announced in advance, rather than a surprise at the shelf. A customer who knows the rule and sees it applied to everyone will usually pay to keep the van coming.
For a customer who genuinely cannot pay at once, a written plan beats a stand-off: a fixed amount on fixed dates, with new orders for cash until the old balance is cleared.
TipTell the rep before you put a customer on hold, so the conversation at the shop is not the first they hear of it.
Measure how long you wait
Days sales outstanding tells you roughly how many days of credit sales are sitting unpaid. Work it out from receivables and credit sales over the same period, and track it monthly together with the past-due share of the aging. Both should fall as the habits take hold.
Here, 67,000 ÷ 201,000 × 90 = 30 days.
Checklist: Collecting receivables
- Write the payment term on every customer and invoice
- Print the due date on the invoice
- Run an aging by due date every week
- Call before the due date, not only after
- Collect at the visit and apply each payment
- Carry the statement to the visit
- Turn every dispute into a return or credit note quickly
- Announce holds before you apply them
- Track days sales outstanding monthly