Top Billing

Steve Ransom thought collections were sheer torture. The CEO of $3.2 million, 30-employee Ransom Environmental, in Newburyport, Mass., never found it easy to induce customers to pay. The intangible nature of his business - when is the task of an environmental consultant truly done? - hardly made for smooth cyclical billing. His accounting department couldn't just whip up an invoice based on billable hours; it needed detailed status letters from project managers who could justify all billing decisions to the penny.

Because customers' paying habits die hard, Ransom realized that only by billing faster could he collect faster. Yet as far as his project managers were concerned, billing and collection were continually on the company's back burner. So Ransom insisted that draft invoices be treated as a top priority when they hit managers' in-boxes - he wanted invoices to be sent out within one week of the month's closing.

Ransom also added some peer pressure. The company began to have weekly operations meetings targeting accounts receivable, in which managers had to give status reports on their customers. He distributed a receivables-aging chart to all the managers, which spelled out whose customers were late and by how many days. The managers didn't gripe about the shift in priorities. "It was something we knew we had to do. It just isn't always fun to ask for money," says vice president and project manager Tim Snay.

Since his collection initiatives began a year ago, Ransom has seen measurable improvement. His average collection period has improved by 10 to 15 days and is now down to around 60 days. The added cash flow saves the company $1,000 to $2,000 a month in interest on its line of credit. But for Ransom, who has also tried more conventional solutions like up-front billing and flat fees, it's only the first scratch of an oft-ignored itch. "There are still problems," he concedes. "But now we're making sure they're recognized and understood."

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