How does baseball compare to accounts receivable?

Let’s use baseball as an example… How many times have you struck out and in doing so you hampered your ability to win the game solely because you were focused on what you did wrong? Well, in theory, recovering accounts receivable is very much the same. When we focus on what went wrong, we inhibit our ability to regain a win.

If your business has not experienced success in recovering past due receivables, it’s time to refocus and implement new strategies that will result in success. What’s done is done… you can’t change what’s already happened; in order to succeed you must shift your focus to regaining control of the game.

In baseball, you don’t get to try again if you strike out; but in business you do. Take some time to evaluate the “instant replay,” don’t dwell on what went wrong, focus on strategies that will enable you to turn failures into success.

Perhaps your credit policy is too lenient; as a result you have acquired slow-paying customers, or customers that don’t pay at all. In today’s economy we are focused on getting new customers to enable our businesses to grow and prosper. Tightening up your credit policy may help to increase your ability to gain credit worthy customers who will be more likely to adhere to your payment terms.

Each year you should reassess your customer’s credit worthiness. You may need to adjust payment terms for customers that reflect past due. There are no laws that dictate that you must accept Net 30 payment terms; you have the option to require payment upfront, or adjust the payment terms to dictate payment is due upon receipt of the products or services you provide.

Keep especially close tabs on your aging reports. Don’t rely on your DSO (Days Sales Outstanding) calculations to identify past due balances; old balances appear the same as new balances in a DSO calculation.

Communication will alleviate all kinds of problems. It’s important to make contact with customers as soon as the account reflects past due. There may have been a discrepancy in the order, or your customer may be experiencing cash flow problems… Whatever the case, you can’t resolve the problem if you don’t know what it is.

If there’s a dispute over products or services it is important to address the problem and make it right as soon as possible; your business’ reputation depends on it. If your customer is experiencing cash flow problems, demonstrate your willingness to help by offering a payment schedule you both can live with; this could be as simple as breaking up the balance due into two or three equal payments… it’s better to get consistent payments coming in than to be put on hold until your customer’s cash flow issues improve.

Whether it’s baseball or business it’s hard to stay focused when you’re losing the game… Winning athletes quickly assess the situation by identifying problems and implementing strategies that will result in a win. The same theory hold true in business; if you want to gain capital growth you must be prepared to turn a losing situation into a successful one. Your receivables are a big part of your business’ capital; in order to gain capital growth you must maximize your ability to transform accounts receivable into accounts received successfully and efficiently.