Monday, August 23, 2010
Life Is What Happens ...
"Life is what happens to you while you're busy making other plans," according to John Lennon.
As it relates to accounts receivable and running a business, remember that your customer, client or patient gets pulled in many directions as well. Their good intent this morning could have fallen victim to spilled coffee, a rude driver in traffic, a customer service disaster, etc.
Here some ways to help reduce the distance between your objective (being paid) and their reality (life happened).
1. It starts with stated credit policy. Is your credit policy stated, in writing, in your lobby or waiting area?
2. Stay in touch. Be sure to bill monthly. Every month.
3. Follow close. Statements/letters should be no more than 30 days apart. Phone calls (reminders) should be no more than 7 days apart.
4. Get rid of the boxes. If your statements reflect boxes that show 30 days, 60 days, 90 days, etc. - get rid of them! Human nature says if a past due debtor sees there are two more boxes to the right, that must mean they have two more months before something bad happens to them. Instead, reflect a due date. You're much more likely to be put in the "to be paid" pile sooner.
5. Reach out and hug someone. Make it a practice to touch 10% of your client base, at a minimum, each month by phone, and another 10% per month by mail. You'll ensure a minimum of two personal contacts per year. Ask for feed back, offer to do an analysis of how you are stacking up to expectations. THANK THEM for their business. People do business with those they know and like ... and they pay them more readily as well.
6. Time does not heal all wounds. In the service arena, the longer the time span between your service and their payment, the higher the chance that emotionally it becomes your fault they are late. Or your service wasn't up to their expectation. Or they resent your car, your house, your degree. Consistent follow up early on is the key, despite the inclination to think you could be "bothering them."
7. Consider offering a discount for early payment. It's more cost effective than chasing after the money.
8. Use a third party sooner. Most businesses wait at least 90 days more then they should to pursue collections. Between 90 and 180 days, the likelihood of your getting your money decreases by one half percent per day.
Feel free to ask questions or to share what you do in regards to "life happening."