Toolboxplaybook-back-btn Playbookplaybook-back-btn Chapter 12

CHAPTER 12

Keys to Success in the Office

The end of the month "closing of the books" can be something everyone dreads. With a solid plan for the entire process, from forecasting to reaching the bottom line — plus the help of Quickbooks’ integration with ServiceTitan — eases the burden.

SECTION 4 OF 5

Accounts Receivable Collections

It is recommended that a company reviews all outstanding Accounts Receivable on a daily or weekly basis.  Even a company that only does Residential work, there are times where a customer may not be able to pay for work at the time of service. 

Contractors involved with Commercial work will almost always bill out work to a third party or a corporate office. Businesses set terms either at the customer level or at the invoice level.   

In ServiceTitan, the default configuration defaults the payment due date as the same date as the Invoice date. You can configure the account to have a separate due date that’s driven through a payment term name with a set due date based on your setup.   

There are a few ways to set up an Accounts Receivable Payment Term. They are:

  • Always the current Date

  • Set based on number of days after invoice date

  • Set based on a fixed date in the current month

  • Set based on a fixed date in the next month

  • Set based on a custom date for the specific scenario (ex. Customer wants to pay next Friday)

Once you have your Payment Terms set up, it’s up to the contractor to collect the funds based on the given due dates.  In a perfect world, it takes 1-2 touch points with the consumer and the payment is processed.  However, there may be times where reaching the customer may be a bit more difficult.  

It is recommended that you come up with a process that fits your business that allows for collection on outstanding invoices as soon as possible.  As invoices become more and more overdue, it is much more difficult to collect and some contractors will hire a collections agency to assist.   

Here is an example of a timeline and workflow of how to approach collections of AR Invoices.

  • AR Report by customer gets sent to an office user daily.

  • 1st day overdue: Make sure the invoice is emailed; send another courtesy email of the overdue invoice.

  • 5th day overdue: Make a courtesy call to the customer.   

    • Do not focus the overdue invoice as the intent of calling. Check in with the customer on how he/she is doing.  Ask a few questions. In the industry, we call it a “Happy Call.”

      • How was your service?

      • Did the technician wear shoe covers?

      • Have you noticed a significant difference since we left?

    • Usually the 1st question (How was the service?) will give you a tip if collections will turn the conversation south.

      • If the service is great, ask for the payment.

      • If the service was not to standard, or if there was a complaint, show sympathy and let management know.

  • 10th day overdue: Follow up by email with a copy of the AR statement.

  • 15th day overdue: Make a second courtesy call to the customer.

    • Perform the happy call process if unable to connect on the first call.

  • 20th day overdue: Follow up with a second email of the statement, but change verbiage to state that there are serious overdue invoices and that payment is required or any services may be delayed.

  • 30th day overdue: Make a third courtesy call to the customer.  

  • 45th day overdue: Make a fourth courtesy call to the customer.  If no payment, send out a certified letter to the customer.

  • 60th day overdue: Make a last attempt to collect (call, email).  If there is no payment, send it to the collections agency and write off the balance to “bad debt.” 

This process above will be challenging to perform on a daily basis and consistently. However, if you set a policy to follow up on customers once per week, it’s important to stay involved with the customers who become further and further delinquent.   

ServiceTitan has an AR management module that will give a user the ability to take notes of each contact.  In addition, you can collect on overdue balances as well as streamline communications by bulk printing and emailing statements.   

Note: If you send a statement through ST, make sure you attach all open invoices.  Most consumers' first objection to payment is that he/she will say they never got the original invoice or need another copy.

Go to Section 5: Writing off Bad Debt