Having a consistent and timely system of collecting accounts receivable is critical to successful collections. It is important that the CFO provides the direction to implement the Accounts Receivable Collection strategy. Here is a quick example: 

Assume an invoice with terms of net 30 days.

Between the 35th-40th day, contact the customer.  If the customer is someone who typically pays within 30-40 days, do not contact them until the 40th-50th day.  If the customer does not return your call or you were not satisfied with the customer’s answer, send a 10-day Demand Letter, requiring payment within 10 days or the account will be put in collection.  If you are not paid by the 11th-15th day, then put the account in collection.

I always use a collection agency that has a legal staff so that if the account is not collected using traditional collection methods, legal action can be taken right away. Once again, the key to the process is consistency and timeliness.

Implementing a solid Accounts Receivable collection strategy is one of the many things a part-time CFO can do for you!