If your customers or consumers have invoices that are well overdue, then you're effectively lending them cash. They signed a contract with you when they bought your products or services, and that expounded that they might pay inside a certain period of you supplying them with a valid invoice. You kept your end of the bargain by providing the products and services, and providing the valid invoice. If they do not pay you on time, they're effectively making an attempt to borrow money from you.
Let's be honest - if they do not need to pay you then they do not need to go to the bank executive and ask for a loan or overdraft. And borrowing from you is so much cheaper!
Once an invoice reaches its payment date, it becomes your money. Why are they refusing to offer you your money? More to the point - why are you letting them hold on to it? Don't you have anything better to do with it? Companies that achieve success in their money management always commence with making sure that their credit control systems are high concern. They never let buyers / clients go past a cutoff date without a telephone call. They by no means wait more than another week before a follow-up call. They never leave it months before they escalate the problem to senior management. And senior management doesn't back away from threatening legal action or service / supply withdrawals. They communicate well, with meticulously thought-through levels of assertiveness (maybe even deliberate aggression).
At a small software company that was in dreadful money crisis. TO being a logical solution the CFO looked at a new aged debtors list . They started chasing up each single invoice that was late, asking the customer account executives to get info on why the invoice was not paid and when we could expect the cash. They observed the comments on the debtors report for inclusion next time if acceptable. They also asked the accounts team to observe the account each day and send a mail whenever money came in to their accounts - notifying the account manager, project executive, sales director and the CFO.
There would be occasions when probably pull off a customer's site, refusing to do any more work till the past due invoices were paid. And the invoices were then paid extremely quickly, and without loss to the customer relationship. Eventually, with that kind of detailed attention, this company ended up with less than five invoices more than two weeks late, representing less than five percent of the total debtor balance.
