Accounting Best Practices, Fifth Edition

7–1. Clearly Define Account Ownership

The sales staff is frequently unwilling to make collection calls on behalf of the accounting staff, because this takes away from their time in making new sales. However, the best contact with the customer is the salesperson, who has probably met with the customer multiple times and has built up a firm relationship, thereby making the salesperson the most effective collections person a company has.

To improve the collections process, a company should clearly define who “owns” each customer account and assign collection responsibility to the salesperson who has been given account ownership. “Ownership” means that the salesperson’s name or sales region number should be included in the accounting database for each customer name. This does not mean that the bulk of the sales staff’s job is now collections, but rather that the accounting department’s collections staff can now call upon specific individuals in the sales department when they feel that they will not otherwise collect payment on an invoice. To enhance the cooperation of the sales staff in the enforcement of collections, the compensation of the sales department manager should be tied to the proportion of cash collected from customers, which will entice this person to force the cooperation of his or her staff with the accounting department.

This concept should also be extended to the collections staff. There are usually specific customer issues associated with the nonpayment of an invoice, ...