Tips for Improving Customer Payment
For many companies Accounts Receivable collection can at best be described as a chore and at worst as an anxiety-inducing experience where one large delinquent customer can put their own business in jeopardy.
As a bank that offers factoring, or Accounts Receivable financing, The Southern Bank has a wealth of experience optimizing accounts receivable collection and in turn cash conversion for our customers. As such, we quizzed our Accounts Receivable collection team here to garner some advice in improving customer payment.
Develop the habit: All too often, business owners ship product or provide the service and hope for the best. Like developing any other healthy habit, it’s necessary to block off time either every day or week to collection, so that it becomes second nature. Consistent, respectful, and friendly communication is key to ensuring a strong working relationship with your customer’s payable department.
Invoice accuracy: Check, double-check, and confirm invoice accuracy. Make sure payment terms, remit to addresses, and invoice destinations are correct. Maintain a system that ensures your invoice and payment doesn’t get lost. In A/R collection, time is truly money so don’t cause the delay with an invoice error.
Manage expectations and train your customers: Be consistent with your customers. Calling haphazardly and collecting aggressively based on your own cash needs will only cause confusion and strain. Companies like to buy from suppliers that make them easy to buy from. By sticking to your contract and internal process, your customer will be better prepared and willing to remit payment on time and with less effort.
Smile and dial: Not just a phrase for sales, collecting payment can at times be difficult no matter how solid your process. Your customers likely have other vendors, their own delinquent customers, and their own cash balance to work with – smiling, maintaining a positive attitude, and listening goes a long way in facilitating payment.
Don’t be blind: It’s easy to ignore and hope for the best when faced with delayed payments. While no one likes to face the likelihood of a write-off, the sooner you communicate concerns with a delinquent customer, the sooner you will resolve the issue. Don’t let a bad customer put you out of business, monitor all your customers’ payment behaviors and be prepared to respond to any negative trends.
If long payment cycles or Accounts Receivable collection remains a challenge for your business, you might be a good candidate for The Southern Bank’s Cash Flow Management program. Contact us today and we’ll fill you in on how we help businesses accelerate payment and improve their financial health.