Collections Tip: Discounts Sometimes Work
CPA firms who chase after collections know that it is sometimes a losing game. Each firm tries to collect any outstanding balances due for obvious reasons, but doing so may be very difficult.
One suggestion is to provide a 'discount' if the client were to pay within a specified time period. For example, if you have a client that is 90 days overdue, offer five to 10 percent discount if the client pays within a 10 or 15 day period.
While this isn't the perfect scenario, it might ensure you collect on at least most of your invoice, and any fees you would have paid to collection agencies would far outweigh the cost of the discount.
If collections continue to be a problem with a client, you should question why you continue to do business with that particular client. Cut your losses, and move on to greener and more lucrative pastures.
Voice of the Editor
Which isn’t completely true. I mean, occasionally I drop by when I manage to sneak out of the nonstop frat party over at Going Concern, but I’m mostly a wallflower over there. I’m happy to say that I’ve been given express permission (or explicit orders, if you like) to wander over here to AccountingWEB more often.
Why is that, you might ask? My job is to replace the irreplaceable Gail Perry as Editor-in-Chief. What does that mean? I don’t really know! I think it’ll be fun getting a feel for things, throwing in my own thoughts here and there, and listening to the discussions you’re having about the accounting profession.