Improving Your Collection Cycle

Collecting overdue accounts is, for many small business owners, the most unpleasant task of all. The task is unpleasant for two main reasons: because keeping track of which accounts are overdue can be so difficult, and because most people don't enjoy pressing others for money.

While we may not be able to make debt collection pleasurable, we can make it a whole lot less painful for you. We can make it less painful both by showing you how to keep better track of your overdue accounts and by suggesting how you can improve your collection techniques.

Organization. That whole process of identifying overdue accounts and taking steps to collect your money is called your collection cycle. The best place to start improving your collection cycle (or, if you're just starting out, to build an effective collection cycle) is to get organized. Probably the most common reason why collections get out of hand is poor organization. If you have a lot of customers buying on credit and they buy from you throughout the month, each with different terms, keeping track can be extraordinarily difficult. However, there are a number of software programs on the market that can greatly simplify this task.

Follow these basic rules, and you'll soon be behind the wheel of a well-oiled, fine-tuned collection machine.