Wish there was a way to make your late paying customers pay up? Sadly, there’s no shortcut for that. You need to plan hard from the very beginning. However, with diligent account receivable management you can easily stay on top of those accounts on a regular basis. All you need is a little wisdom.
Fusion has a vast experience in account receivable management for our esteemed clients. We have realized that account receivable management is more about a systematic approach than persuading a customer to pay. Of course, making collection call is an art in its own accord but there are a number of steps you must diligently follow before making those calls to smoothen the process of account recovery.
In this blog, we will share our tips for a successful account receivable management:
1) Get Organized – To excel at accounts receivable management, you have to be diligent in each step of the process, especially, in who you decide to extend credit to. Start by creating a professional credit application that allows to get as much info as you can on these customers.
This information should be scrutinized to help you make proper credit decisions. Once you decide to extend credit to a customer, make sure to have a contract where the terms are stated clearly and that the customer is fully aware of that.
2) Use the Credit Limit to Your Advantage – Start extending moderate credit with a set limit to your customers and let them know they can get more flexible terms in they good payment behavior. This incentive allows you to really get to know customers’ payment habits before you offer them bigger credit. This ensures a customer will practice proper payment behavior.
3) Bond with Your Customers – Today, CRM has become one of the most important part of accounts receivable management. Creating strong and healthy relationship with a client ups your chance of getting paid. No one wants to ruin a good relationship with a company over an unpaid invoice.
Therefore, you must nurture your relationship with your customers beyond business. Engage them in every social media platform, comment on their posts, wish them on their special occasions to create an emotional bond. When you show that you are paying attention, your customers will assume that you will be as diligent about your payment.
4) Early Birds Get the Worm – Create a system to send reminder to the customers when they have a payment around the corner. A simple reminder mail stating the due date and payment modes a week prior to the due date would suffice.
5) When It’s Late, Don’t Wait – Go straight after late payments soon after the due date has passed. The longer you wait to collect, the harder the collection process gets.
6) Remind – Some of your customers may simply forgot to pay you. You can get them pay by simply sending them a reminder email as soon as the payment is past due date. However, instead of sending generic reminder, be particular about the language of the letter. A chronic late offender should not get the same letter as a first-time offender.
7) Stay Professional – Whatever you do, don’t get emotional. When you let emotion cloud your decisions, it is a downhill journey from there. Half the work in account receivable management is in learning how to stay professional. Just keep calm, and carry on!
8) Collection Call – You have sent your reminders and got nothing back from them. Now what? It is time to get on the phone with the customer. Keep your emotion under check and prepare for the call. Take control of the conversation but listen to what the customer has to say. However, be ready to hear some of the most common excuses and learn how to respond to each one.
9) Installments and Incentives – When toy come across a customer going through a tough financial situation, you may offer them the installment plan in which they pay you a small amount over a specified period of time. It is better than getting no payment. At Fusion, we have also found that incentive go a long way. You can waive the late payment charge or give a discount to customers who pay within a certain date. It is great to get paid upfront, but when that’s not possible getting creative gets you going.
10) Know When to Turn for Help – It is great to do things by yourself, but it is wise to call in the experts when you find yourself overwhelmed. For particularly large or repeatedly delinquent accounts it is better to hire a debt collection lawyer to help you take legal action. Reporting the late payers to the credit bureaus is also a viable option. However, the party that can help you the most are Account Receivable Management call centers, whom you can hire to do the job for you. Having plenty of experience in dealing with the trickiest of customers, they will be able to recover the money for you without mistreating you or your customers.
Fusion has a great track record of running successful accounts receivable management campaigns for our esteemed clients. We specialize in collection in a number of areas including auto finance, fintech, utilities, mortgage and credit card. Do you think we will be fit for you as a collection partner? Let’s talk.