Albert Einstein said, “The definition of insanity is doing the same thing over and over again, and expecting different results.”

No matter what we do, some customers will become delinquent. Controlling A/R delinquency is of paramount importance to the financial health of your business. Bad checks and charge-backs are serious. After all, the easiest way to reduce your profit or go out of business is by an escalating loss of revenue. And since A/R is nothing more than revenue that has yet to be received, it obviously poses risk to the company to which the money is owed.

Handling aged accounts should be done through a process of escalating letters and telephone calls. If you’ve implemented a regimented in-house collection procedure but are unable to resolve an account at 90 days, it’s time for a formal demand letter. But once the demand letter expires, you need to consider a new approach before you wind up duplicating your own efforts. This is where Einstein’s words hit home. Don’t make the mistake of sending follow up letters or making follow up phone calls after you’ve sent your final demand letter. You’re diluting the spirit of the demand, giving the debtor a sense of immunity.

C2C Resources offers a web-based collection software program … and it is free to use. It provides tools that will enable you to focus your A/R efforts and can help you formulate and implement an effective internal collection policy. There is no cost or commitment required. C2C Resources provides this service in an effort to assist our partners in navigating pitfalls associated with aged receivables. Use of the system will result in fewer accounts hitting the 90 day mark and will result in more efficient cash flow for your business.

In creating that policy, the most important thing to do is schedule a series of letters and phone calls that build upon one another.