Key individuals (two owners and two senior executives) from four smaller E&S dealerships share their best practices and modus operandi on the essential job of keeping money owed to their firms flowing in on a timely basis.
Being aware of which customers owe how much money and staying on top of the amounts and payment-due dates at all times is essential to keeping accounts receivable under control and constitutes a best practice at Penn Fixture & Supply Co., Pittsburgh, a $5 million dealership, according to Mitchell Hoffman, its president and owner. "I treat monitoring our receivables as nothing short of a survival strategy for our company. Despite my many years in E&S distribution, I'm still surprised at the new ways customers devise to [withhold payment].
Either you get good at accounting for your receivables or you go out of business. I recognize this function's importance and continue to make it the focal point of my day."
According to Lee Long, operations manager at Foodservice Equipment Brokers, Springdale, Ark., "Communication is the key" to the company's success in collecting its accounts receivable. "We believe keeping receivables in line starts with our sales staff, specifically the establishment of strong relationships between our salespeople and their customers." FEB's salespeople are encouraged to maintain a "good guy" posture with customers to ensure communication continues, but they are also kept aware that they must collect past-due balances in order to sell more to an account.
Executives at a small, owner-operated (one brother and two sisters) dealership, Marco Restaurant & Bar Supply, Southampton, Pa., believe that persistence is what keeps their A/R collections in line. Vice President and principal Mike Garfinkle said that there's no great secret involved in the process. "While I'm the go-to guy when problems arise, our company clearly sets payment terms in advance of sales and keeps all customers' receivables information on a current basis." When asked how much time he spends on this vital activity, Garfinkle quipped, "Too much and never enough."
Vice President/CFO Marie White of May Foodservice & Design Corp., Cranston, R.I., noted that the company's watchword for the collection of its accounts receivable is to be "consistent and tenacious." Great emphasis is placed on keeping customer records current to the minute. The "magic number" for collections is set at 20 days for follow up on most bills unless extended terms (usually no more than 35 to 40 days; 45 days to contractors) had been agreed upon.
2012 Best In Class Winners
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