You can have wonderful gross profit margins and even show wonderful net profits on paper however without great processes on accounts receivable you will just have paper with no real value to celebrate with. For those of you with a large amount of aged receivables and the desire to take action start by calling your customers with old balances and offer a discount to pay using a credit card.

If there is no desire to pay a reduced amount with a credit card these accounts are planning to never pay you. Depending on the amounts best practice is to file them for small claims cases as soon as possible. Many folks will then ask for payment plans if they really want to do their best. Follow through with judgments as your local state laws allow. Putting forth the effort on real old receivables will provide a good reason to review policy on open accounts. With the company accepting credit cards, checks, and cash there is little reason for accounts receivables in the first place. Body shops can have huge amounts quickly add up with just one client so don't forget the parts department on establishing good policy on receivables. Are your managers involved and understand policy at your dealership? Is someone in the office informing management of amounts and aging on receivables? If not get started quickly improving your policy and control of this often frozen asset.  

Rob Gehring is the President of Fixed Performance 
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