Sellers can avoid bad
debt losses through better handling of
their receivables. Here are some
Create and maintain accurate customer
records, including full name of customer's
bank. Know name of person who approves
payment, signs check and the superior
of each at customer location. Call a
new customer and tell your credit terms.
Ask: Can you live with that? If No,
ask customer what terms he wants. If
acceptable, accept! It is better to
be surely paid in 45 days than to wonder,
at forty days, why your thirty-day terms
were ignored. Confirm by letter your
agreed payment terms. Consider repeating
this entire process yearly, always seeking
to impress customer of your carefulness
in credit granting.
Know that slow payers
trigger a different approach. On receipt
of order, call and indicate your exact
credit terms, ask if that's agreeable.
In effect, get an advance commitment
of future payment, specific to that
situation. Confirm your accomplishment
in writing. Then, when order is shipped
or five days later, make another call,
again reminding slow pay customer of
his prior agreement to your payment
expectation. And, the most important
call of all is made five days before
payment is due. "I hope you are
thinking about the money due us next
Tuesday. Will there be any problem?"
Pause, listen. Be sure that what is
agreed upon during this call is clearly
understood by you and your customer.
Be firm here because you already had
Do you have 'No Pays'?
You should! If all customers pay within
or very near your terms, you're losing
business and profits. However, it will
be your critical handling of these 'No
Payers' that will enable you to reduce
receivables loss to a desired level.
The key is early identification of potential
'no payers', and then to make four or
five programmed, orderly contacts. If
these contacts fail, it should be your
unflappable decision to utilize an authoritative
Third Party such as a collection agency
or an attorney. By placing claims early,
complete with correct data, the Third
Party will do their job more quickly
and at less cost. Your advantage? You
get your money faster and are free to
work on current problems, keeping them
from getting out of hand.
is an art, not just a matter of being
tough. Success depends on your ability
to convey to your customer the importance
of accepting the responsibility to honor
his commitment - in short, to keeping
his promise to pay you. Early and frequent
communication builds rapport with the
customer and demonstrates your seriousness
about being promptly paid. Remember,
everyone pays some bills on time. With
consistent follow-up, your bill can
be one of those paid.