Effective Collection Policies and Practices

In her Exchange article, "Accounts Receivable Management: Effective Policies and Practices" (included in the new Exchange Essential, "The Business of ECE Finance,") Kathy Ligon makes the point that "more often than not, schools have effective policies in place, but are not enforcing them consistently. This creates a strain on cash flow and diverts valuable time that owners and directors would rather spend on strengthening programs and services to children and parents. Make no mistake — managing accounts receivable will always take some amount of time — the objective is to be effective and efficient with that time.

The first step in accounts receivable management is to be sure that an effective policy is articulated and provided in writing to all parents…The second step…is repetition, follow through, and consistency…This could mean setting up a regular time each week where the owner or director makes accounts receivable the number one priority. As uncomfortable as it might be to make collection phone calls, think of how uncomfortable it will be if there is not enough cash to pay the bills."

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