Is it Possible to Improve Customer Payments?

13 Jan

Just because you set up payment terms doesn’t necessarily mean your customer will abide by them. Many customers adopt their own payment schedule in spite of the terms they agreed to.

handshake-440959_640There are lots of reasons that can happen, and in the end, if your customer pays you late, but is consistent about it, it’s probably best to just go with it. It’s only when that late payer slips further and further into bad habits that you should be alarmed.

Getting a new customer to play by your rules is certainly much easier than reeling an old customer back in. For that reason, we suggest starting new customers out with strict terms. Go over each point in your credit policy laying out the expectation that they’ll follow through.

To further establish your expectations, follow-up on their first order. Call them to confirm that sure they received their order or services as expected. Did they get your invoice? Is it correct? Do they have any questions? This isn’t something you’ll do every single time to the point of distraction, but in the very beginning of your business relationship, this contact will help to establish that you take your terms seriously … and you expect them to do the same.

Goes without saying … but we’ll say it … changing payment habits with an existing customer will be a bigger challenge.

Established customers who run off the rails with payments may need some re-alignment. Try the following to get things back in sync.

  1. Re-educate your team on your Credit Policy

Those in your employ to deal with customers need to know your credit policy well. They can help to solidify your terms in your customer’s minds. It is possible that someone on staff may have communicated something to your customer that gave ‘permission’ to pay late.

  1. Create a Process

Establishing expectations for payment is an ongoing process. Even if you’ve reached the collections stage with a customer, you still must continue setting your boundaries. For this reason, we encourage utilizing a timeline for collections. Consistent collection efforts communicate that you take your terms seriously and that you expect customers to do the same.

  1. Assign Collectors With Specificity

Many people will assign a collector based solely on geography, or worse, by the alphabet. Sure it’s fast. But it’s not effective.

Choosing the right collector is about evaluating their talent. One may excel at soft collections by helping to resolve administrative problems or make phones calls to build rapport with a customer. Some collectors thrive on the tougher accounts, and therefore, excel at negotiating. Place the talent with the right cases. It’s save time and get more money.

  1. Become Problem Solvers

Sure, getting the money is the bottom line. But retaining the customer in the process of collections is the ultimate goal. When a collector commits himself to helping to solve a problem, it does more than collect money. It can actually make a problem go away bringing relief to your customer.

Look, the customer has a debt-monkey on his back. He wants it off more than you do. Your collector can help make that happen. The collector who takes that attitude is more likely to achieve the goal.

  1. Utilize An Accounts Receivable Management System

[Insert shameless plug here] Yes, we’re about to do it. We’re about to plug our own Accounts Receivable Management System. It’s called Profit Maximizer, and it’s our free web-based system that helps businesses by streamlining their collection process.

It’s everything in one place. Not only is there a direct link to QuickBooks, but we also offer plenty of collection letter templates and call scripts to help you through the process with professionalism. Get reports when you need them with the information you require right at your fingertips.

  1. Double-check Your Invoices

Sometimes payments are late because of inaccuracies. If a busy person sees a problem with your invoice, it may get tossed in the ‘to do’ pile. If your invoice isn’t easy to scan for the dollar amount, you guessed it … into the ‘to do’ pile.

Make it easy to pay you. Your invoice should be spot on every single time and super easy to scan and read for the dollar amount and the date it’s due.

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