5 Tips for solid collection process

The collection process is one of the oldest pain areas in the business cycle since the mankind started to do business. Families, tribes, cities, and kingdoms suffered from the delay in collecting the goods or the gold that were agreed upon in the trade agreements. Wars started for the same reason in certain occasions.

Business cycle suffers from the same issue nowadays. Big corporates may not get impacted much by the delay in receiving the due amounts from their clients or customers.

Small and medium enterprises are more vulnerable to the impact of weak or loose collection process. This may lead to business discontinuity / closure as the enterprise couldn`t pay their expenses and accordingly lost control over the entire cashflow cycle!

The question now is how small & medium enterprises can balance between a firm collection process and flexible business modules, so they earn business and grow?

Five tactics you should apply to achieve this equation:

1-     Clear payment process in the contract.

During a lot of problem-solving exercises with small and medium enterprises, I was surprised to find out that they use a contract template for all their clients regardless of the consequences of each project.

80% of the contracts I have reviewed didn`t have any clear invoicing / payment / dispute process. This may be very simple, but it`s important to add such things from the beginning so you could manage the conflicts if it happened.

2-     Don`t start working without a contract.

Another thing that a lot of small & medium enterprises do is starting a business without a contract. This common mistake will cost you a lot in managing the expectations and payment as well.

3-     Send the invoice.

Don`t be surprised, yes account managers often forget to send the invoice details to the finance department so the latest can issue the invoice and the payment cycle starts.

4-     Projectized organization structure.

Adopting a projectized hierarchy will give you control over the deliverables and the P&L of each project. Accordingly, you will get to know when exactly your project / account manager should trigger the collection call.

5-     We use the money to work.

Don`t be afraid of stopping the business activities for collection failure, if your service Is important to your clients, they will pay for it. Without money your staff won`t get paid and your company won`t survive.