Do you have a process in place to review the outstanding Accounts Receivable (AR) on a regular (no less than monthly) basis? Are there action items that are created from that review? Are these action items tracked? Is there a discipline instilled within the company to make the calls to ensure timely collections?
Calling a client about an outstanding invoice can seem like an intimidating process, but it doesn’t have to be. First of all, project managers should typically not call other project managers for outstanding bills. Someone in accounting should call the AP (Accounts Payable) person at the client to check the status of your invoice. Just like your company has a staff person responsible for paying bills, so do your clients – and AP staff like to pay bills – it’s their job. When two staff people from the accounting departments are talking about an invoice that hasn’t been paid, they are simply talking about a business transaction. When project managers have this conversation, not only is neither project manager in a position to actually get the invoice paid, but emotions can get involved.
Of course, an ounce of prevention is a good rule to live by. A key rule to ensure that an invoice will not become overdue is to call the AP person at every new client and find out what they need on their invoices , when you need to get an invoice to them to meet their internal cut off for cutting checks and then call again after the first invoice to make sure that everything is working as expected. Make the AP person your friend. Does it make sense to wait 60 or 90 days to find out you didn’t put the date in the right place or provide sufficient detail? Of course not, but most companies do just that.
Bottom Line: Paying early and collecting late diminishes cash – and that just can’t be good for business.