3
O P I N I O N
Show me the money! Keep your accounts receivable on a short leash if you want your collection period to shrink, and your bank statement to grow.
H ow does a growth oriented company in our industry manage the balance between attracting new customers, keeping existing ones happy, and keeping cash coming in the door? Is it possible to administer an effective collections process without damaging the client relationship? Most of us have a formal collections process, but in reviewing the latest industry trends it is apparent we could be doing a better job. In fact, according to Zweig Group’s 2016 Financial Performance Survey , the data shows the median average collection period in 2016 was 84 days. Eighty-four days! This is a huge jump from 68 days in 2015. While the economy continues to produce billable work and our companies continue to grow, we must be mindful, and willing, to do what it takes to ensure we are getting paid.
Jeremy Calloway
One process we decided to focus on at the beginning of 2017 was, you guessed it, accounts receivable. In 2016, our average collection period was, for lack of a better word, average. I don’t know about you, but I hate being average. To switch things up, we implemented an accounts receivable process centered around timely and consistent communication, with the goal of ensuring our valued clients are consistently adhering to our payment terms.
Our AR aging timeline is categorized by date range, beginning with the current timeframe and transitioning to past due values of one to 30 days, 31 to 60 days, 61 to 90 days, and greater than 90 days. Beginning with the current timeframe, it is our responsibility to consistently get invoices emailed to clients within the first five days of the month. Clients then have the remainder of the month to remit payment before the current
See JEREMY CALLOWAY, page 4
THE ZWEIG LETTER May 29, 2017, ISSUE 1202
Made with FlippingBook Annual report