Spring Broke? Yep. Here we go … college students everywhere are gearing up to hit the beach and for plenty of small businesses, that means one thing – slow payments. Let’s face it, most people live paycheck to paycheck.
That’s not a condemnation of people, that is simply the truth. Think about it like this: every person has a budget.
They will make “X” number of dollars this week, thus they can spend “Y” on bills and miscellaneous. Vacations and holidays introduce a variable into that equation and most people simply don’t plan for the expense – especially college kids that are working part time in low-paying jobs (and they won’t make any money the week they are at the beach!)
Have you done that? Sure, we love it when you call us, but the best way to get collections is to avoid collections. To do that, you should clearly set expectations with the customer and make it easy for them to pay you. Put yourself in their shoes – if I asked you to drive all over town to give me money, would that work out for you?
Make it easy for them to pay. Yes, we’ve mentioned it time and again, but it still holds true. We are receiving positive comments on the ideas, so hopefully our message is clear. It comes down to this – most customers want to pay. How can you help them to pay? We’ve discussed making it easy, but let’s also look at the premise that sometimes “stuff” just happens (Like, for example, Spring Break!)
How about the idea of flexibility in payment? Many types of software available today have the ability to handle this and when you are able to offer this both as an incentive (“you’ve paid six months on time, take this month off”) or emergency benefit (“I understand that your septic system had to be fixed, take this month off”). Beware, though, this is the realm of verbal conversations and notes on legal pads. Unless you have clear documentation, such as in your A/R software, you will have a hard time proving or disproving the circumstances.
Another option that really speeds up payments comes by sending truly accurate invoices. If these were sent via email, then pointing out how close the customer is to paying off the debt completely may actually cause the client to pay the total owed rather than simply a balance due. Just remember, everyone doesn’t have email, or they prefer traditional billing methods, so it’s important to meet your clients needs, while at the same time implementing policies and practices that increase the likelihood of payment.
We are rapidly approaching the point in the spring where many of our customers will be having to pay taxes and that could lead to some shortcomings in your A/R department. Again, simplifying your policies and making it easier for the customer to pay can make a lot of headaches go away – and take only a minor bit of work on the part of you and your company. For the heavy lifting, of course, you need to get a pro like Credit Service Company – we’ll be happy to help