The true value of your business and the equity contained within is determined by the cold, hard facts on the balance sheet. Take the following advice to tighten up your payment and debt collection processes.
Companies should not be afraid to be more aggressive in seeking payments from their customers – that is, after all, their part of the transaction. As long as you have upheld your end of the contract by providing the stated goods and services at the right quality and price, the consumer relationship should not be damaged when you ask for the money owed.
Keep lines of credit adequate yet low. You may not track the interest accrued on outstanding consumer balances, but you can bet that your suppliers are charging you for every day you wait on that money.
Follow up regularly and often
In most cases, after 90 days the chances of an outstanding payment being made are significantly reduced. Business leaders and decision-makers will of course have other concerns in the meantime, but customer invoices shouldn’t be left by the wayside.
Using the telephone as the primary method of contacting consumers can arguably be more effective than email in reaching the right person. Emails can be more easily ignored, but missed calls and voicemail messages will stack up.
Streamline customer service procedures
A happy, satisfied customer is much more likely to meet their payment obligations on time. Disputes, complaints and requests for replacements or refunds can considerably delay transactions. Having reliable, professional and effective customer service will also increase brand loyalty as the company’s positive reputation spreads.
Incentivise and inform employees
If commission on completed transactions is a method of rewarding employees, consider other non-financial incentives to lessen the impact on the bottom line.
Holding a central database of consumer information also keeps things simple for both staff and customers. Those contacting you to discuss a transaction needn’t worry about having to repeat themselves to multiple employees, and all staff should know where relevant data is and have suitable access privileges.
Work out what more effective processes are worth
Making changes will take time, but consider the long-term benefits to the company rather than the immediate inconvenience.
Assuming that there are five issues, each taking two hours to resolve, that amounts to just ten hours of work required for that entire financial year. In only ten hours, you can rectify multiple problems impacting your balance sheet and retain customers who would otherwise have walked away.
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