You’ve got some receivables to collect, which ones to choose? How do you go about it?

If you haven’t run it, produce an aged trial balance. One that shows the aging going across, usually in 30 day buckets. The first column with numbers might show the dollars that are current, the next column showing dollars that are 0 to 30 days past due, then 31 to 60 days past due, etcetera. That’s a good starting point.

So, who do you begin to call? One approach that is often done is to start at the beginning and then work your way down the list. I think you can see the problem with that. Sometimes you might not always be able to get through the whole list. Companies that start with Z get in a preferential position. I once had a boss who wanted to name a new company Aardvark after the animal. I suggested that might be a bad idea because we’re always going to show up at the top of the accounts receivable aging of our suppliers and we’d get more collection calls than we might otherwise. Not that we were going to be late in our payments and showing up anyways.

A better approach will be to work backwards from the right-hand side. Look at the ones that have the most significant dollars in the far right-hand column. Some of those may already have had action on them and there’s nothing more to do at this particular point. Work on those accounts then keep moving back towards the center of the report. After you’re done with the old column, move over to the next oldest column and keep on going.

You also might want to scope it by dollar amount, perhaps begin by focusing on amounts over a certain limit say $1,000, $10,000 or more depending upon the size of your business.

Another thing to look at will be items that seem out of alignment. In other words, are they customers that typically pay on time or close to on time, but suddenly have some invoices that are old which seem out of character for them? It could be a signal that something is wrong, such as a missing invoice or perhaps a dispute on a receipt or maybe pricing questions. Make a call on that to nip it in the bud.

Sometimes an approach to can be to alter how you approach it in a week, perhaps start a different point to make sure you get those accounts covered rather than always starting at the same point each week.

Try using different approaches. Have a method for working the open accounts receivable in a more intelligent fashion that one can focus on where the dollars on and two be catching situations before they get too old. Try this and you might find over time you’ll have less things to be calling on come the following week.