3 Easy Steps to Get Paid Sooner
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3 Easy Steps to Get Paid Sooner

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Building a world-class receivables program doesn’t require massive investment, or creating a new department from scratch, or figuring out a new way to get aggressive with customers. Global enterprises are learning that the secret to making the most of credit and collections tools comes down to having the right strategy.

The right strategy boils down to three simple steps. And these work for any business managing an accounts receivable portfolio, regardless of size or industry. When Bronze Age Demand-Coerce-Extract tactics are no longer an option, these simple tools will bring the most challenging of collection scenarios into the Information Age.

3 Easy Steps to Get Paid Sooner

ENGAGE: Customers that are emotionally invested will make payment a priority

Some business models work primarily with consumers. On payday, engaged consumers will often write out a check first for a company they feel emotionally connected with. Think of it as brand loyalty, taken a step further. While it may not seem like a collections function on the face of it, doesn’t it make sense that a company with a social networking “Like” or “Follow” is more likely to get paid promptly than one that isn’t connected?

Dealing with corporate customers is suprisingly similar. Often, the fastest solution involves a wild goose chase at a customer’s Accounts Payable department. There is no feeling of collection wizardry like a customer’s AP rep hand-carrying an invoice through the halls of a Fortune 100 company simply on account of politeness and friendly emails. It’s effective.

TRAIN: Set customers up for timely payment success

Make sure invoices clearly communicate due dates, payment options, and expectations. Do as much as possible to encourage early and automatic payments, such as providing a 2% discount if payments are made 7 days in advance. Offer to provide a premium for consistently timely payments.

Boost Mobile does this with their “shrinkage” program. Every payment that comes in automatically is one paying customer that doesn’t require sales or collection efforts of any kind. Encourage automatic and online payments monthly. The idea is to make timely payments a habit, rather than a decision.

RESTORE: Turn past-dues back into timely payers

Rather than relying on stop-ships or closed accounts as a way to discourage late payments, focus on getting customers back on track. Restore the flow of payments, as well as sales. Customers who are poorly positioned to make additional purchases, such as those experiencing financial hardship, will still feel confident recommending family and friends. They may strongly encourage their contacts to seek out the company that “worked with them.”

Concentrate efforts heavily on the first few days after a payment falls behind. That’s the point at which customers have the least catching up to do. While “picking up where they left off” may not seem like an ideal option, it keeps the customer from searching for another vendor, and ensures their loyalty for when circumstances improve.

When working with a corporate Accounts Payable department, this collaborative approach ensures that not only will they be more responsive to inquiries, but that problems will be resolved more quickly.

Between credit risk screening and final recourse lies a huge gap in customer relationship management that can impact receivables results. Make sure you’re not leaving everything in between to chance.

 

About the Author:

Eric LaBrant authored Dirty Little Secrets of Collections: What Your Agency Isn’t Telling You, and launched LaBrant Receivables in 2012 to provide global receivables-focused consulting services. He currently maintains the Get Paid Sooner blog.

Having pioneered the groundbreaking Engage-Train-Restore methodology, he enjoys putting hard numbers behind something many companies are realizing with the onset of the Information Age: It pays to be nice.

photo credit: Leo Reynolds via photopin cc

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