By Faith Barnard, Executive Consultant
Collection efforts are even more difficult than before COVID-19 struck. But with an adjusted approach and a little outside-the-box thinking, your success can earn customer loyalty and make a measurable impact on your own business. Here are five ideas to consider to increase your company’s cash flow:
- Keep in touch. Calling is always best. Your customers know your phone number when it comes up on caller ID and know why you’re calling. But a follow-up email or text can be less irritating and keep your name in front of customers. If they respond, you have something in writing to talk about the next time you call. After all, the “squeaky wheel” is really true.
- Ask probing questions. Remember, your customers are experiencing the same cash flow issues as you. The business slowdown and reduced revenues find them thinking about who to pay first. What is going through their minds? Get to know your customers better: Did they receive their Payment Protection Plan (PPP) money? Are they getting paid from their own customers? How’s their cash flow? Do they get paid mainly via credit card? Many customers who purchase on credit intend to pay within the terms of sale but, sometimes, a payment time and/or adjustment is needed.
- Be compassionate. Make weekly calls with a dose of compassion. It’s the “capture more flies with honey” approach. For example, the CFO of a local bakery that services mom-and-pop restaurants knew that her customers had been hard hit by the early shutdown. She called to ask how they were doing and what major challenges they were up against. Then she listened. More times than not during the conversation, it was the customer who mentioned the need to make a payment and propose a payment arrangement. That CFO is building long-term customer relationships and seeing an uptick in the bakery’s business. The lesson: Listen more, pursue money less.
- DYI vs. collection agencies. Most collection agencies will charge 30 percent to 50 percent of the credit due. Consider making the calls yourself and offering a 10 percent discount if the customer will put the full amount on a credit card. Find a way to help the customer to stay in business while continuing to pay you. If you need to deny product, it could foster ill will or put that customer out of business. Rather, consider offering the C.O.D. approach to include the past payment.
- Don’t give up. Constant contact is essential but be sure to ask the customer “When is a good time to call you back?” — give them a choice versus saying “I’ll call again next week.” If it’s a long-term customer and you know it’s not likely to go out of business, maybe you end up collecting a partial payment to help cover your costs in the short term. It’s time for a little give and take. And keep in mind that many business-to-business customers are now working from home, which means reaching a lot of voice mails apologizing for increased turnaround on return calls. Persistence and patience will be needed in finding cell numbers and where your invoice may be in their system.
Need more ideas for collection during these hard times? I also help small companies that do not have enough work for a full-time admin person. Contact me via email (email@example.com) or call me at 952-829-5700.