Improve
Your Cash Flow
When a business sells
a good, or provides a service, it has a
right to be paid in a timely manner.
And, in todays
competitive environment, effective credit
and collection policies can make the difference
between tiny or tidy profits.
The following 10 tips
can help your company maximize its cash-flow,
while minimizing its slow-pay or non-pay
accounts.
1. Have a Clear and Concise Credit Policy.
One of the main reasons for slow-pay
or non-pay accounts is that the business
has not clearly defined to its customers
(and employees) the companys credit
policies.
Confusion often leads
to inaction on the part of the customer.
And, inaction means that you dont
get paid.
Make sure that the
payment schedule, payment date, and penalties
for late or non-payment are clearly stated.
You may even require the customer to initial
the contract next to each of these important
sections. And, always give the customer
a copy of their contract for future review.
2. Properly Train
Employees and Staff.
Make sure that each and every employee
understands the importance of proper and
consistent collection of accounts receivables.
After all, their job depends on it.
Make sure that your
employees explain your policies clearly
and accurately to the customer during the
purchase process, going over the main sections
of the contract with them.
3. Invoice Promptly
and Properly.
One of the most difficult things for
a small business is to keep on top of accounts
receivables. If you dont have a systematic
invoicing and billing system, you will likely
fall behind. Often times the only reason
a customer hasnt paid is because they
havent received a bill or been reminded
to pay in a timely manner.
4. Contact Customer
Promptly Following Late or Non-Payment.
Research has shown that the longer you
wait to contact a delinquent account, the
lower your chances of collecting the debt.
Try to contact past
due accounts within 14 days, and on a weekly
basis thereafter.
The bottom line is
this: If you arent being paid, someone
else is. Make sure that that someone
is you by calling often, in a polite, professional
manner.
5. Be Precise in
What You Expect from the Customer.
Never leave a contact open ended, such
as, Well talk next week
or, Ill send what I can.
Every contact that you make should result
in a specific commitment for payment, by
a specified date.
6. Control the
Conversation.
Even the most experienced staff member
can sometimes let emotion get in the way
when dealing with delinquent customers.
Dont let customers sidetrack you with
personal history or a variety of excuses.
Remember, the object of the call is to collect
the money that they owe you. Be firm, yet
courteous when dealing with them. And, above
all, dont feel guilty for asking the
customer to keep their end of the bargain.
7. Be Flexible.
Be ready to adjust to the situation.
The best solution in a given situation may
be a new payment plan. Be prepared to accept
a reasonable payment schedule, and willing
to be flexible with a customers circumstances.
8. Keep Accurate
Records.
Keep detailed, accurate notes of every
contact you have with the customer. Accurate
records will help with subsequent phone
calls and in making future credit decisions,
In addition, it may become important if
litigation becomes necessary.
9. Follow All Collection
Laws.
Each state has different collection
laws, so make sure that you check with your
states department of finance to see
what laws your state has regarding collecting
delinquent debts. In many states, businesses
are governed by the same collection laws
as collection agencies. For example, calling
customers at an odd hour or disclosing personal
information to a third-party can cause you
serious repercussions. Always remember that
the customer has rights, and make sure that
you never violate them.
10. Use a Third-Party
to Collect Past-Due Debt.
After 90 days, the success of in-house
collections drops by 80%. If your customer
still hasnt paid after 90 days, your
best option is to turn those accounts over
to a collection agency. A third-party can
motivate the customer to pay in ways that
you cannot.
At A & S Collections, we are committed
to helping you collect on your delinquent
accounts, and keep your cash-flow, well,
flowing.
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