Welcome to Rauch Milliken International

Invoices should be sent to the customer when materials are delivered or services performed. Your terms of net 10/30 days should be clearly reflected on any and all billing items. If payment is not received by the 31st day, a Past Due Notice should immediately be sent allowing an additional 30 days for payment. If a check is not received by the 45th day, direct phone contact should be made with the customer. Inquire why payment has not been received (e.g., do they have the invoice to pay, do they have a possible dispute, or do they have any other problem preventing them from making payment). Restate the terms to your customer. If payment is not received by the 61st day, a Last Past Due Notice should immediately be sent out, allowing 4 days for your invoice to be received by the customer. On the 65th day, phone contact should be made with the customer. Inquire why payment has not been made and inform the customer that you will allow them 10 days, as a courtesy, to make payment before taking further action. On the 75th day, if payment is not received, a Final Demand should be sent out to the customer by certified mail, allowing 10 or more days for payment. A copy of this Final Demand should also be forwarded to your sales person.

If payment is not received by the 90th day, this debtor has clearly defined his position - he has no intention of paying your invoice and you will have to fight for your money. At this point, RMI collection will begin for you.

All invoices should include your credit terms. The words “Terms Net 10/30 Days” should be prominently displayed. We also suggest that you include an interest policy on each invoice. This policy should read something like the following: “A finance charge of 1½% per month, which is an APR of 18%, will be charged on all accounts 30 days past due.” This is an incentive for valued customers to stay current.

On the 31st day, your past due invoice should be sent. You can simply send another copy of the original invoice; however, you should make a few additions. The words “Past Due” should be placed at the top of the invoice in bold print or red ink. You should further include something similar to the following: “Our terms are net 10/30 days. Your account is past due. Please remit the outstanding balance to this office. If you have any questions or problems with this statement, please contact _____________________ at _______________________.”

Phone contact is made to determine if the customer is becoming a debtor. Inquire why payment has not been received (e.g., do they have the invoice to pay, do they have a possible dispute, or do they have any other problem preventing them from making payment). If there is a problem or a dispute, now is the time to find out and resolve it. Restate the terms to your customer.

On the 61st day, your late past due invoice should be sent and direct phone contact made. The top of the invoice should include “LATE PAST DUE – Please remit the outstanding balance to this office today.”

On the 65th day, phone contact should be made with the customer. Inquire why payment has not been received and inform the customer that, as a courtesy, you will allow them 10 days to make payment before taking further action.

On the 75th day, if no payment is received, a “Seriously Delinquent Notice” is sent by certified mail and phone contact is made. Be specific and persistent in asking why this bill has not been paid. Inform the customer that a check must be received within 10 days of this conversation. Instill in the customer your seriousness about getting your money in a timely fashion. Make them understand this delay in payment is unacceptable and will not be tolerated. At this point we have the customer clearly defined – they do have an invoice to pay and there is no legitimate dispute that has not already been resolved. This debtor does have a cash flow problem.

DON’T MAKE THEIR PROBLEM YOURS!

At 90 days, the customer file should be reviewed in preparation for placement. Gather the invoice copies, credit application, proof of delivery information, any contracts, and submit the claim to RMI. We will take over the management of the claim and immediately make demand on the debtor company.

All files are documented and all backup is complete and correct. Phone calls and letter series separate debtors from customers. You can answer to anyone in your company that you have done everything in their best interest.

Credit Managers are asked to balance two opposing forces. Companies first and foremost want to sell, sell, sell! On one hand, credit managers are expected to extend credit with some level of risk. On the other hand, companies expect to be paid within their given terms. The responsibility of balancing this paradigm is what makes the Credit Manager such a valuable commodity. Companies are also looking to cut expenses and minimize the costs incurred to recover past due accounts. Utilizing RMI to manage past due accounts is by far the most cost effective way to add more profit to your bottom line. Allow RMI to free up your valued personnel to work with customers that are in need of your in-house assistance; we can manage those accounts that are past their terms and are not following through on commitments. Behind every great Credit Professional is a solid third party Debt Recovery Resource. Why not use the tools that so many are using successfully? Contact us today!"

BE SURE TO WATCH OUT FOR THE FOLLOWING RED FLAG INDICATORS:

• Failure to take cash discounts
• Sudden loss of officers of the company
• Substantial management turnover
• Resignation of outside board members
• Frequent requests for waivers of covenant
• Failure to meet forecasts
• Restatement of financial statements
• Poor cash flow with dwindling cash balances
• Growing debt-to-equity ratio
• Current liabilities that are higher than current assets
• Lack of success with recent merger or expansion
• Closing of recently opened operations
• Granting security interests in certain assets to creditors
• Increase in the interest rate the company must pay
• Inability to make shipment because of lack of raw material
• Slowdown in turnover of inventory and/or receivables
• Decreasing order backlog
• Declining profits
• Loss of major customer or supplier
• Steady loss of market share

• Breaks terms
• Avoiding Contact
• Breaks first promise
• Customer has late dispute
• Customer competitors start calling for credit references
• Customer only makes partial remittance

• Bankruptcy Notice
• Phone disconnected
• Mail returned