People like asking people for money about as much as people like being asked for money. Not a lot. There is a way, though, to take the pain out of your debt collection process.
It’s important to actually have a debt collection process, for starters. Don’t leave it too long before you start to follow up on late payments. If you have a routine for collection and timing of collection of invoices, you can save yourself and your business a lot of time and expense later on.
Believe it or not, it’s also an opportunity to build on the quality of customer service delivered by your company. Successful business is based on customer relationships that are loyal and strong. Utilising customer service as a level of support for collection service can actually help strengthen your relationship with your customer. In order for this aspect to work, though, you (or your company) need to be in regular contact with your customer PRIOR to the invoice falling due.
You don’t want the customer to have that hunted feeling whenever you call. “I only ever hear from you when you want money” is what you say to your teenage children, not what your customer should say to you. Keep in contact with your customer, to see if there are any problems. It is easier and less costly for a company to retain their current customer base than it is find new customers. This can be done through communication and respect. A simple, regular phone can go a long way when it comes to monitoring the performance of a relationship.
- Do you have all invoices?
- Are you happy with the service/product?
- Are there any problems with paying?
These are questions you can work casually into a conversation without it being all about payment, and without it being threatening. If any issues are highlighted, you then have the opportunity to resolve them before the invoice falls due, thus paving the way for on-time payment – and impressing your customer.
But what if your customer doesn’t pay?
If the customer has not expressed any issues throughout your regular contact, yet payment is still late and ongoing, a good credit controller will think ‘cash flow issues’, and start a follow-up investigation. Not only through the normal credit avenues, but through your own in-house investigative tools. Talk to the sales team who might drive by the customer occasionally, or customer service agents who deal with them regularly over the phone… these are your ‘eyes and ears’, and you can use them effectively.
If the customer still hasn’t paid, then it’s time to address the situation. It’s crucial to have urgency in the process – but nicely, nicely. Phrases such as “if you don’t pay, it may affect supply of continuing service and goods” can be made in a non-threatening manner, and alerts your customer that they are in non-compliance with the terms and conditions. Where possible, you want to keep their continuing business.
Communication can be made either by email or by phone, but if there is no response, than the best form of communication is always by phone – not email. Grammar, punctuation, spelling – it’s all clear cut on the page, but the tone is always subjective to the reader – not the writer. The impression, and therefore emphasis, can be misconstrued from an email. Also, an email may not reach its intended target as individuals may move within the business, or leave it altogether.
The best form of communication, at least to start, is via phone. You can hear the tone in which words are said, you can ‘read between the lines’, and possibly hear what your customer is not saying. Is the conversation comfortable? Terse? Pressured? Surprised? Are they listening, or distracted?
A good credit controller will then gauge the next course of action, and if necessary, the level of escalation. Is the relationship strained? Why? Are they only hearing from you, the credit controller – what about their account manager, customer service, etc.? Are you possibly losing sales as this customer withdraws? Are there areas within the relationship that can be improved to not only ensure payment of this invoice, but several more in the future?
A customer is not just one order – it’s important to remember that in your collection process, and to treat them accordingly.
For more information on debt collection services, contact the Admin Plus team.