Out of Collections and Into the Bank - 6 Tips for Getting Paid
By Kevin Leib, National Account Manager at LEIB Solutions
Has this happened to you?
You sign up a new client and everything appears to be going smoothly until it comes time for them to actually pay for your service or product. You do everything in your power to resolve the matter but they still will not respond or send the payment.
This type of situation is far too common, but there are some preventative measures you can take to help prevent it from ever happening to you. Managing your accounts receivable matters is a tough job and sometimes internal collections and customer service calls just don’t have enough leverage to facilitate payment. Instances like this require further action and the next immediate step could be to send to a third party collection agency.
Here are 6 quick tips for managing accounts receivable matters before having to send to a collection agency.
- Make collection/ customer service calls early and often. If you have 30-day terms, make your own collections calls on day 31 and establish a line of communication with your customer. Even if they are not going to pay immediately, it is crucial to keep your invoice at the top of their pile.
- Perform credit checks before you do business. Then use the data as warning signs in making the decision whether to extend credit or service to a company. It’s OK not to extend credit and work on a payment-on-delivery method for a few months while a relationship is established.
- In addition to credit checks, have your customer or prospect provide credit references. Be sure to follow up and call the references as soon as possible.
- Communicate and work directly with your customers. Communicate the need for prompt payment according to terms. At first, be respectful and likable, but persistent – a “squeaky wheel”. In addition to being kind and respectful, you must be able to wear many different hats when handling a past due invoice or account. There will be instances where you must relay a message that instills a sense of urgency to pay. An authoritative technique must be used when the “kind and friendly” tactic has run its course. This style of internal collection is used when your customer starts to ignore your calls, emails, or any form of communication. It is best to understand why your customer is ignoring your attempts. Is it because of a cash flow problem? Or because they are doing business with a similar vendor and they found that your service/ product is no longer necessary to their operation?
- Do your best to understand exactly what your customer’s business functions are. Understanding their business will greatly help you to understand any problems they may face as your relationship progresses.
- Make sure you have a firm process in place.
A good receivable process has three pillars:
- When you invoice
- Terms you offer
- How you handle past-due accounts
Invoice your customer quickly. Another key component to a seamless accounts receivable process is setting conservative terms and staying on top of past-due invoices. Time will always work against you when it comes to collection matters. The recovery of an account drastically reduces every month when an invoice is not paid.
There will be many reasons why the bill has not been paid and it is up to you to get to the bottom of the situation and provide a quick and amicable resolution before turning the account over to a third party collection agency.
Kevin is responsible for client relations as well as new business development/ sales at LEIB Solutions, one of North America’s leading Commercial Collection agencies with more than 25 years of experience in Accounts Receivable Management (ARM) domestically and internationally. LEIB is committed to high standards, and state of the art technology enabling us to maximize recovery and increase your revenue. Due to fulfilling our promise to our clients, LEIB has become one of the leading collection agencies in North America. NOTE: The views expressed here are those of the authors and do not necessarily represent or reflect the views of GALA.