There are many myths surrounding the effective collection of accounts. This is one of the main ones.
Focus on the oldest and largest accounts first to collect a lot of money quickly.
The “fast money” in ALL practices and businesses is in the current fees and those that are just overdue.
Most people think that to collect as much money as possible as quickly as possible from the Aged Trial Balance you should focus on the oldest and largest accounts first. WRONG!!
Why? Because … the ‘fast money’ always lies in the newest accounts. Think about it for a moment. By their very definition, it took your old accounts a long time to get ‘old’. Some clients have got used to not paying your account. It’s almost as if you’ve trained some of them not to pay you because you haven’t been following them up to pay! So, it’s going to take you a while to un-train them.
And the largest accounts are – well, how can I put this – LARGE! And this is going to be easy to get these clients to pay you these large and old amounts quickly? I think not. Especially if you’ve already trained them NOT to.
No, the ‘fast money’ is in the accounts that have just fallen due to be paid. And it’s part of the re-education of the client body as well. Training them to pay your account when it’s due. Not someone else before you. So, that’s where most effort should be initially given.