After a recent review of our internal policies and procedures I found a glaring area of inconsistency that affects both us and our clients – our accounts receivable and collections process.
Although we already have a very basic, established policy – invoices are due within 20 days, late fees apply to past due balances, etc – I found that we haven’t been consistent in applying these policies in our receivables process. Sometimes we asses finance charges, sometimes we don’t. Sometimes we’ll e-mail a reminder of an upcoming balance due, sometimes we won’t. This creates an environment where our clients cannot depend on us for consistency which is unacceptable to me – our clients deserve better.
To help bring about the consistency we need, I took the time to bring together the ad-hoc policies we’ve been inconsistently implementing already and created an official, dependable policy our clients can count on. To allow time for you to review this memo, as some of these items might represent a change from our current policies, the items outlined below won’t take effect until January 1, 2012:
General Invoicing Policies
· Invoicing is done weekly - generally on Mondays.
· Charges for monthly services (such as offsite backup and mail protection) will be included on the first invoice of the month for the following month's service.
NET Terms Credit Policies
· Products including Hardware, Software and Monthly services (such as offsite backup and mail protection) must be paid up front.
· Hardware and Software are ordered from suppliers after we receive payment in full.
· Hourly labor is invoiced each week as worked. Net 30 Days.
· Flat-Fee projects are invoiced as specified in the project scope.
o Project Scope will still adhere to the above Credit Policies regarding hardware and software.
IT Concierge Payment Policies
· All payments on IT Concierge service agreement are deducted from your chosen payment method automatically on the 5th of the month for the current month's service.
o Failed payments will be reattempted. Payments failing a second time will result in suspension of services until payment can be made by other methods.
· All manual payments on IT Concierge service agreements must be pre-paid 3-months in advance, due on the 1st of the month that the three months of service begins.
Late Payment Policies
· On Day 28+ after the invoice date, a reminder that an invoice is due soon will be sent to the client's billing contact by e-mail.
· On or after day 31 after the invoice date, a Late Fee of $15 or 2% of the past due balance (whichever is greater) is assessed and added to your account balance.
· On or after day 61 after the invoice date, a Continuing Late Fee of $15 or 2% of the past due balance (whichever is greater) is assessed and added to your account balance.
· On or after day 75 after the invoice date, the account is placed in collections.
Important Note: If a balance is owed on any invoice that is 49 or more days past its invoiced date, all work for the client is stopped until the client's account balance is brought current. This includes work on other projects or agreements with the same client, even if those projects or agreements have been paid in full.
Monthly Services: As Monthly Services are required to be paid up front, services will be suspended if not paid in full before the monthly service is scheduled to begin even if the invoice they appear on is not yet 49 or more days past its invoiced date.
As always, I’d like to personally thank you for your continued business. If you have any questions regarding these policies please don’t hesitate to contact me directly at (310) 782-6112 x11.
Best Regards,
Justin Swall
President
Swall’s Business Consultants
Swall’s Business Consultants