Like it or not, some customers always lag in their payments. It hurts your company's cash flow and causes frustration for both your accounts receivable personnel and the customers.
But you can get your receivables in better shape and keep them there if you get your staff on this regular exercise routine:
Be accommodating. Talk directly with the person who signs the checks and call him or her by name. Present your company as friendly, understanding and personable. Let the customer talk and explain why the payment is late. There may be extreme circumstances that you can help resolve. Wade through the "sob stories" to get to the truth so you can figure out your options.
Create an action plan. Get a payment agreement before the conversation ends. Any payment beats no payment and it shows the customer is trying. It also helps to keep communication open. You may need to alter payment terms to match the customer's cash flow or make the payments smaller over a longer period. Repeat the agreement to the customer and follow up in writing. This helps ensure that both parties understand the deal and creates a paper trail that has a powerful effect on the customer's commitment.
Balance the extent of your efforts against your relationship with the customer and what's worked before, but use every means possible to maintain contact. This includes mail, e-mail, telephone, and personal visits. Send notices early so the client has a full business week to pay you. And if there's a discount, encourage customers to save money by taking advantage of it.
Keep it simple. Make sure your invoices are sent out on time and clearly show how much is owed and why. Otherwise, customers may throw them into the do-later stack. When they finally get around to paying, they may spend their time — and yours — calling to ask for an explanation of the charges.
Work together. If customers need more itemization, try to customize the bills as much as possible without sparking rebellion in your billing department. Avoid jargon: Many customers have no clue what 2/10 net 30 days means to them. Explain it by saying: "We will give you a 2% discount off the amount due if you pay us within 10 days of the invoice date." Or, "Pay the amount due within 10 days of the invoice date and you'll get an annual discount rate of 26%." By converting the savings into a dollar amount, the results will be even better.
Take your time, understand your customers' needs and try to help them. You'll not only get your money faster, you'll strengthen relationships with your clientele. And that means a more pumped up bottom line.
Get in touch today and find out how we can help you meet your objectives.