I know you are wondering what in the world, credit policies have to do with marketing. Well, just like the fact that pricing is the lost component of marketing, your credit policies are the lost component of customer service. If you cannot collect from your client, then you cannot serve them, unless you seriously like working for free. What good is all the marketing in the world if you do not collect from that wonderful client that you extended credit to. Following some of these techniques that have been used and established by many collection gurus will help you to keep that relationship open by getting paid.
Know Who You are Doing Your Business
When was the last time someone gave you a credit card without filling out a credit application and getting references. It’s good to not just know a company’s credit score but how well are they paying other people who do business with them.
Defined Credit Policy:
If you don’t know what your credit policy is, no one else will, so decide what you want to happen and write it down so that it will happen, it’s a self fulfilling prophecy, if you expect to get paid and let you clients know that in the beginning, then you most likely will get paid.
This is a policy I recently designed for one of my clients in a Strategic Marketing Plan.
Net 30 days for all accounts
1.5% if ten days overdue
2% after 30 days
Discounted by 2% if paid by 15th
You can’t expect clients to just send you money; their accountants may not like that. Most of them want an invoice, here are some guidelines:
Invoice all accounts on the 30th,
Out by the 5th
Reminder on 10th of early payment discount
Discounted at 2% for early payment by the 15th
Net 30 days
Address Service Requested
Use Address Service Requested printed or stamped on every billing envelope just below business return address in top left corner. If Customer has moved, the Post Office will research change of address and send you business Form #3547 and correct the address for a small fee.
Contact Overdue Accounts Frequently
Call with gentle reminder if not paid by the 5th of month following when payment was due.
If not paid by 15th, call gain.
Use Aging Sheet
Develop 30/60/90 accounts receivable sheet, move quickly to keep accounts up to date. This will let you accounts know that “floating” the payment due you is unacceptable.
Train Your Staff in Your Credit and Collection Policies
Train your staff to not only keep accounts current with friendly phone calls but to also maintain good will.
Follow the Collection Laws in the State You do Business in.
Things like calling at odd hours and disclosing that bill is late to neighbors or other businesses are not only bad etiquette but against the law.
Find a Third Party Collection Agency Before You Need It!
The hope is that you never need a third party collection agency, but find one before you need one and one that charges a flat fee on collection services. Having someone in place ahead of time can mean saving the company filing charges and attorneys fees and extending the process of getting paid.
Determine according to tax law and advantages at which point you will write off an account as uncollectible according to its aging, don’t beat yourself up if you have an account you can’t collect. No one that I know in business has managed to collect on every account owed to them. If you have, wonderful, consider yourself blessed and highly privileged.
This blog post can be reproduced in its entirety with the following information: © Joanne Quinn-Smith, Monday Morning Marketeer 412-628-5048
Listen at: http://www.talkshoe.com/talkshoe/web/tscmd/tc/33960