Customers generally pay on time, or when chased, or when threatened.
Sellers must find time to know which are which and deal with them accordingly.
Methods available: VISIT - EMAIL- PHONE - LETTER - FAX.
A Stop-List can also be effective for products in short supply.
Visit the top few major accounts to resolve problems and build relationships while collecting large cheques. Sales staff can be allowed to do this as long as they act promptly.
Phone major accounts in advance of due dates to ensure payments are in process, in time to solve problems before your deadline. Phone all other accounts, working down the list by size of debt, according to time available. MAKE SURE OF ALL LARGE DEBTS BEFORE TELEPHONING SMALL DEBTS. Working in alphabetical or account number order is dangerous.
When contacting your debtors by telephone, it is important to observe the following:
- Be systematic – incorporate phone calls into your collection strategy. A good strategy will timetable appropriate dates for issuing invoices, making phone calls and issuing reminders.
- Be prepared – check that the information relating to the outstanding debt is correct, and that the information is readily available when making the call, i.e. the account number, the credit limit available to the debtor, the invoice date and the balance due.
- Be courteous – remember that every contact your company makes with your customer can add to your existing relationship. A professional but friendly approach can earn your debtor's respect and cement loyalty.
Send letters to any overdue accounts too small to telephone. Two standard letters are enough after an Overdue Message on the statement. A polite reminder letter should be enough for customers who 'Pay when Chased'.
For those who only 'Pay when Threatened', a second and Final Demand is needed.
The intervals between the letters depend on company cultures, but 14 days is plenty.
If the Final Demand does not work, its threat must be carried out. Bluffs are soon seen as weakness.
Faxes convey urgency and often beat defensive barriers when letters are being ignored or phone calls diverted. They should be sent to senior people and are more significant when third-party action is mentioned.
Remember - phoning for cash is easily the most effective collection method.