Is it a cynic or a realist who says that any company that's never had an accounts-receivable problem either isn't looking very hard or isn't selling very hard? Either way, most companies do admit to having bad debt. One way for a business to cut down on difficult collections is to tie salespeople's commissions to the collection of receivables.
The way managers at Macke Business Products, based in Rochester, N.Y., figure it, it all depends on how you define a sale. For 20 years, the office-products distributor has run under the theory that a sale doesn't count until the money comes in. As a result, a salesperson's commission is reduced by 5% if an account is 60 days past due; 10% at 90 days; and lost altogether at 120 days.
The assumption is that a call to a delinquent customer from the company's credit department is probably less effective and more alienating than a reminder from the salesperson in charge of the account. As for the sales force itself, the system encourages greater awareness of customers' financial stability. Salespeople go on every sales call with a binder that includes a weekly sales printout, inventory accounts, and the monthly aging reports on that particular account's payment history.
Copyright 1995 G+J USA Publishing