Your business is like a machine. To keep things running smoothly, you need to keep it tuned-up and well oiled in every area. Debt collection is no exception.
BEFORE an account comes due, there are things you can do to keep all the gears moving toward payment. Some pre-emptive measures can help you avoid making collection calls in the first place.
Try this:
1. Make sure your payment methods are clear and simple.
Have you ever received an invoice that was hard to read? Complicated looking? Inaccurate? It’s frustrating and if you’re swamped, you’re more likely to set that little mess aside and knock out the simple stuff, right?
Create clean invoices. Confirm the contact information, include an online payment option if possible and keep your payment instructions simple. If you have customer’s who still insist on mailed bills, include an envelope.
2. Get to know your customer’s Accounts Payable managers.
You know how important building rapport is with people. When you want a relationship to work, you have to create it. If you have a good and personal relationship with the A/R Department, you’re far more likely to head the list when it’s time to cut checks.
3. Make sure your software is up to date.
An A/R Management software that’s outdated or poorly maintained is sure to slow your machine down. Evaluate your software frequently and if you’re not achieving the results you need, make the change immediately. This is not an area where you should scrimp.
4. Use cutting edge communications.
When is the last time you saw someone use a pager? Being on the cutting edge when it comes to communication is in your best interest. For instance, you can set up bill pay online. Most people prefer online methods especially email communications.
5. Review and revamp your procedures.
If you’re consistently faced with late payments, it’s time to take a close look at your machine. Are your shipments arriving on time as expected? Are your sales people making unreasonable promises? Are YOU consistently late contacting late paying customers?
6. Make your billing policies clear from the start.
Are you certain your customer’s know what’s expected? Are your terms in writing? Make sure they know the terms and if a customer is late, review those terms with them.
Good point! It’s critical to keep up with the changes within your company and make adjustments to your policies so they fit those changes. Thanks for the comment!
I especially like your #5 tip, so many of the companies I’ve worked with in the past are still using outdated policies and procedures set up years prior. As their businesses have grown and changed so should their procedures.