Recently I was the target of a stern lecture about accounts receivable. The speaker asked me why I thought so little of my staff that I wouldn’t demand the client payments we need to pay salaries. Framing it that way goaded me into action.
We revamped our overdue tracking. In addition to the monthly statements and reminder emails, we now have a more assertive phone approach. (I am always astonished to learn that a client has responded with anger to a polite request for payment.)
With the exception of clients with whom we have built a long-term relationship, we set a limit on how high the receivables can go before we begin requiring payment in advance. Some clients have responded with, “Don’t you trust us to pay?” Actually, we don’t.
Most difficult of all, we set deadlines for our most delinquent clients. Notice is sent by certified mail, so there are no questions. As the deadline approaches, we call and remind the client that their account is going to be bumped up, either to our collection agency or to our attorney.
The results have been mixed, as one might expect. Some clients have become angry, some have reacted to the deadline by paying their bill, and some have requested a payment schedule. Any payment plans we put into effect have firm deadlines for complete payment, and we follow through.
Some delinquent clients have completely ignored us, and this has taken us into a whole new experience. For the first time in our 18 years of business, we filed suit against a non-paying client in Florida. It has been an interesting process to watch. The client did not respond to the summons. The client did not appear for the court date. We received a judgment for full payment plus late fees plus attorney’s costs. The client was ordered to provide a list of assets. They ignored the court’s order. Our attorney said that now a writ of bodily attachment has been requested. When I asked him to explain, he said that someone in a uniform with a badge will show up at our client’s door and bodily take them to the court to make payment or to jail until they do.
It’s been fascinating to receive the updates from our attorney. And we are emboldened to use the same process with an overdue client in Kentucky.
Tembua has significantly reduced our receivables through persistence, firmness, and the legal process.
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