Nov. 17, 2025

Cash Collection Strategy

I will discuss a cash collection strategy that has a 40% success rate for those difficult collection situations and system of collecting that will improve your cash flow dramatically.

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WEBVTT

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Hi, you live don too. The Sensu Wow for you young.

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This is the pipe Man here on the Adventures pipe

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Man W four c Y Radio. And this is the

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Positively pipe Man segment where we have a resident expert

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on powerful business strategies that and he represents an amazing

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company that you have to check out called Next Step CFO.

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So welcome to the show, Michael Barbarita.

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Thank you for having me again, Dean. So this week

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I want to talk about something that has happened about

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three or four times and sometimes just comes in rushes

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where people are having trouble collecting their receivables. Now, if

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you want to be good at collecting receivables, which should

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be every company you can think of, UH, if you

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want to be good at collecting receivable is you really

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have to have an account's receivable policy that's done consistently.

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It can't you can't take a vacation from it. You've

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got to stay right on it. And I'm gonna give

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you an example of a of an account's receivable policy

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that that has worked very well for my clients once

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they establish it and actually put it into UH into

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into finally implement it and execute it. So if first

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of all, somebody and it might be it might be

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the business owner, I prefer not to be more like

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a bookkeeper. They need to review accounts receivable once a

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week to determine if there are any past do accounts now, uh,

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if you have terms and people are paying within terms,

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I'm not talking about that. I'm talking about those past due. Uh.

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With on the accounts receivable report that are that's not

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to fade to the right. On the accounts you see

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what report meaning they're over thirty days or there or

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anywhere between one and thirty days, pass due over thirty days,

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over ninety days. So once an account gets passed due

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anywhere between three and seven days need you need to

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call them. So you need to make a policy to

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call those customers and see what you know if there's

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a problem, or just make a courtesy call and reminding

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them that their account is passed due. And by the way,

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every month for any pass due, even if it's on time,

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every month you should be sending statements to your customers

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with the balance with the open balance. So that should

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be happening in the background, and so the clients get

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get a call, you'll leave a message if they're not there,

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you don't get a return learn call. Three days later,

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you make a second call, uh. And then if they

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don't pay after the second call or they don't return

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your call, what I recommend clients do is it's called

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a ten day demand letter. And what I'm gonna do

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is I'm gonna, i know, for the people who are

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on the on the road listening, I'm gonna give it

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a shot here and and share my screen uh and

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show people a specific and I'm gonna walk you through

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this ten day demand letter. So what it is. If

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you went to a collection agency right away, this is

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the first thing they would do. So what I'm doing

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is I'm circumventing going to a collection agency and having

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you prepare it. It's called a ten day demand letter.

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And what it is, it's a letter that has your

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company letter had the date, and then ten day demand

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in big bold higher level font letters, and then attention

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to whoever is the customer, and then you list out

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the invoices that have passed to one by one, plus

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make sure you put an interest line item in there

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at one and a half percent a month because sometimes

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they will pay the interest. Then you put down the

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total due, and you write this will be turned over

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to collection attorneys if payment is not received by ten

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days after the date of the letter, and you could

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put actually the date on there, and if you accept

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credit cards, you put that you accept credit cards, and

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then you write thank you and address it with your

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with your typical whatever you are, maybe the president of

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the company or maybe the CFO or whoever's doing it,

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the bookkeeper, it doesn't matter who's ever doing it. And

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you must send this letter out, return receipt, request it

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because that gets their attention. Now people are gonna say, oh,

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I don't want to give that to a to a

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good customer. The point is is they're not a good

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customer if they don't.

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Pay, and if you let it go once, they're going

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to do it all the time. I myself, like anybody

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that's ever owed me money, whenever you're nice to them,

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they don't pay you.

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That's right. And so all I'm saying is that they

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owe the money, let's get let's let's tell them that

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they need to collect it. Otherwise they're going to go

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to a collection agency now after ten days if they

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make another one last courtesy call, and then if they

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don't respond, to that call. Then you take it to

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the collection attorney. And the reason is it's very simple,

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and I've done it. I do it all the time,

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and I have I have threatened to repossess vehicles of companies.

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I've actually repossessed a vehicle. Although they pay as soon

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as as soon as the sheriff comes to take the vehicle,

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that's it. Ball game's over. We're getting a check.

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See.

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The problem is is that companies that are experiencing accountsel

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receivable problem is it because the customer doesn't have the money.

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They're just deciding to pay somebody else. That's all it is.

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So all this does, especially you have to send it certified.

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It reminds them to send the letter. Now, forty percent

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of the time, in my history and my experience, forty

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percent of the time they'll pay off of that letter.

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Twenty percent of the time they'll pay it with the interest.

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You can force the interest if you want. You don't

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have to, but and make sure all your invoices say

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that one and a half percent interest is do on

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late on a late payment, that's very important to put

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that in there. But even if you didn't, still put

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the interest in there. On the demand letter SOUF and

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so of the time you're getting paid faster, uh, and

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you're getting paid sometimes a little more because of the interest.

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But and then if they don't pay, then they're probably

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they're probably going to be dead beats if they don't pay.

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And that's when you put the collection agency on them,

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and you make sure you have a collection agent who

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is also also we'll go to small claims court for

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you and all that they take a third. And that's

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why I do the demand letter because it circumvents that.

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But it always it works extremely well and it gets.

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Because that's what you'll end up with is nothing now.

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So and that's another thing I think that's important to

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focus on because when people like, well, I'm not going

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to use a collection agency because in I won't get

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them all the money. Well, you're not going to get

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any of the money otherwise, and they think these people

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are going to pay them. I've had people that literally

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tell me that they didn't get paid so they can't

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pay me. I'm like, yeah, you're getting paid by your

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client and your business has no bearing on whether you

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pay me.

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That's right.

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Like you can't say that to FPL, which is the

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electric company here in Florida. You can't say that to

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your you know, your car payment, your mortgage payment. They

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don't care who doesn't and doesn't pay you. It's your

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obligation to pay them no matter what.

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And that's the point the paying the pay. There's nobody

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who has zero in the company bank account today. They

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always have something and they're paying something. Yeah, and so

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you know the reason why your account is passed due

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or your client or customer is past due is because

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they're paying something else and they're not giving you the priority.

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And this demand letter puts you up above anybody else.

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They will think it a pay before they paid you.

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It simply does. And that's why it works so well.

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But then, but there are clients, you know, sixty percent

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of the time there were going to be dead beats

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anyway that you have to take the collection uh, and

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you'll let the attorney handle. It's in their hands from

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then on. And then you know, sometimes people pay when

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they get the collection letters from the from the attorneys.

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But the attorney has to be both a bill collector

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and go to claims us preferably an attorney a collection attorney. Yeah,

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that's the best one to get. They'll they'll you'll pay

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a third, but you at least get paid and then

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you know, do business with that customer again. Because I

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see people they're doing that as well. After somebody doesn't

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pay them, they go back to the well and do

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business with them again, and the same thing happens.

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So they and then the people hold a carrot out

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is what happened, you know. I can't tell you how

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many things people have done to me in my career

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with the carter. I don't buy into it, but they

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always think they're pulling it over on you, like they

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they'll put something, Oh, I have a referral that's going

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to be coming for you, and and he's big money,

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blah blah blah blah. But I can't pay you my payments,

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but I'm sending you this as something that will help out. YEA, yeah, no,

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pay your bill exactly.

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And that's really that's what it comes down to. And

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so I bring this up because a lot of business

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owners lately with me that they say that they have

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trouble collecting, and this is what I've been this is

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what I've been suggesting, and the take and they and

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they work, and they work, and they obviously get paid

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to say, yeah, they paid me. Okay, good, there it is,

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and you didn't go to a collection agent. When you

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send the ten date to me, you know you've circup

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ento the process. You've given yourself priority. You've given yourself

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priority for future invoices too, by the way, because they

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know the process. And by the way, here's one other

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important point. If you're too afraid to do that, what

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I'm suggesting is you go ahead and you do it.

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And then if somebody says, hey, why did you do

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that to me? You know, somebody who's maybe been a

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customer a long time, you say, oh, you know what,

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it's just a bookkeeping thing. This is just our process,

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and it's somehow went through the cracks that your particular

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certified mail went out. That's all you're saying. And it's over,

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and it's over. It's a bookkeeping procedure, that's all you say.

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And by the way, it is totally.

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How do they get more information from you about this

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and many other powerful business strategies.

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So what I like doing, Dean is a book interviews.

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This is where because my because business is constantly changing,

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I like to keep my book updated with fresh new material,

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and so I get that fresh new material from business owners.

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And the way a book interview works is it's sixty

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minutes on zoom. I present strategies from my book and

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then I asked the business owner if the strategy they

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were just presented, what the impact would be for a

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business that would implement it in their industry, and then

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I document it for the book. But the beautiful thing

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about it is they get to learn business strategies that

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competition isn't doing. And so to get a book interview,

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to go to NEXTSTEPCFO dot net, forward slash contact, fill

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out the contact form in the message section, put the

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words book interview, and then I'll send you a calendar

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link so you can schedule the book interview and we

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go from there.

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Beautiful. Well, once again a great week of powerful business

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strategies from you, Michael Barberina, and thank you for all

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you do for businesses to help them out and everybody.

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I implore you to reach out to Michael because he

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even if you're successful, he can help you with strategies

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I will make you more successful. And tune in next

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week because we will have some more powerful business strategies

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with Michael Barbarita. Thank you, thank you, Thank you for

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listening to the adventures of Patemn.

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I'm w for Cui Radio.