ACCOUNTING

Red alert

Discontinuing work on projects for late-paying customers.
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DECEMBER 1990

At Decoma Industries, staying on top of accounts receivable is everybody's job, including the president's. On the Vernon, Calif., architectural firm's project-scheduling board, a red dot goes up next to the names of late-paying customers. Employees halt work on those clients' projects. "It keeps us focused on profitable projects rather than on the ones for which we have the most emotional investment," says president Steve Notaro.

The red dot goes up if an invoice payment is one day past due (30 days after it's mailed). Notaro mails or faxes the customer a copy of the invoice with a note saying work has stopped. He follows up with a letter every 15 days. Each day he personally calls the two most delinquent customers. Notaro has used the approach since the company's founding, 12 years ago. Decoma, a $2.5-million business, has never had a bad debt.

Last updated: Dec 1, 1990




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