Tag Archives: cash flow

What the holiday season means for credit

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The holiday season is quickly approaching and that means it will soon be the busiest season of the year for many of your clients. Most businesses are preparing for the influx of sales from Black Friday, Cyber Monday and the end of Q4 leading up to major gift-giving holidays like Christmas and Hanukah. As Holiday shopping ramps up, businesses have been increasing their inventory dramatically.

What does this mean for you?

While this may not apply to the service-side business customers, your retail customers are most likely investing a significant amount of money right now in the months leading up to the holiday season. By growing their product stock for the holiday rush, they will be looking to negotiate more flexible payment terms or delay their payment to account for the pre-season costs.

What should you do?

While these businesses may be strapped for cash leading up to November and December, it won’t last long. Once shoppers head out to make their holiday purchases, your customers will have plenty of cash on hand to pay off outstanding debt. The one problem is you are not the only person trying to get paid. This means you need to assert yourself as someone they will want to prioritize. The goal is to get on your delinquent customer’s payment schedule. Make your business a priority so that you receive payment between November 15 and December 15. Chasing the debt after December 15 will be unsuccessful because many employees will be away for the holidays and it will be significantly easier to push payment off until the beginning of the year.

If you are in the middle of a debt collection campaign, emphasize the importance of paying the debt when there is an influx of cash flow. Check with your sales team to see when they last visited the delinquent customer . They most likely will have an insider insight to their stock levels and current order quantity. Remember to always do your research first before getting on a call with a customer.

4 Most Common Responses to Your Debt Collection Campaigns

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Running an internal debt collection campaign is essential for getting the money back that your company is rightly owed. While it is important to design your debt collection campaign to effectively reach out to clients quickly after an invoice goes unpaid, knowing what to do after your call, email or letter will help drive success.

Here are the top four most common responses businesses receive from their debt collection efforts:


Prompt payment
This is the ideal scenario. Sometimes a missed invoice is a mistake within the accounting department or the result of an employee being on vacation. If the client promptly pays after you reach out to them on a past-due invoice, always verify the following:

  • The best point of contact’s name, email address and phone number
  • Their preferred mode of contact for invoices (email v. mail)


Acknowledgement, with actionable response
This is the next preferred scenario after you contact a client concerning delinquency. When a client acknowledges that they are late on their payment and confirms a date they can pay their invoice, as a company you should follow-up to confirm:

  • Method of payment
  • If they have all of the essential information to pay (routing number, company address, etc.)
  • Reason for late payment. Gathering as much information as possible for your records is important should the delinquency happen again.


Acknowledgement, but no actionable response
In this scenario, the client is aware that are late on their invoice, but does not confirm or offer a date for payment. Always reach out to the client because he or she could have forgotten to include that information in their communication with you; or they could be waiting on someone within their business to confirm a date of payment. Whatever the case may be, it is your goal to get a date set with the client. The probability of receiving payment drastically increases when you can commit the client to a specific date or payment plan.

No response
If you receive no response from a phone call, email or mailing, there may be several reasons for this.

  • You may not be contacting the correct person.
  • The client has a cash flow problem and has yet to find a solution. They are simply trying to avoid communication with you.
  • The client is unwilling to pay the invoice and is trying to avoid you.

With any delinquent invoice, you should always follow the bad business debt timeline, which features a series of phone calls, letters and emails to engage with the client. You can find the full timeline here: http://c2cresourcesblog.com/c2c-resources-commercial-debt-collection-agency/bad-business-debt-timeline/.

Internal Debt Collection Campaign Tips: What time of day is best to call?

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Your customer has not paid after the final past due notice. It is now time to tackle a debt collection call to figure out when you will be receiving your money. While we often discuss best practice phone etiquette and provide sample call scripts, many clients have inquired about the best time of day to call their clients to get the best results.

While there is no specific time or magic solution for calling and reaching a happy client on the other end of the line, there are several best practices you should follow when calling.

Get to know the person you are calling

Not only do you need to know the specific person to call, but you should try to form a relationship with that person.  If and when the client encounters financial troubles, you will have a deeper insight into their schedule. Keep notes on what business hours the person works, if they only work on certain days and any upcoming vacation time they will be taking. This could all provide helpful insight if you are calling their direct line and continually reaching their voicemail.

Call time can be influenced by business size

If your customer is a very small business, there is a potential that you could be in contact with the business owner instead of an accounts payable employee. If this is the case, try to call concerning collections early in the morning, around 7 a.m. Most business owners get to the office early to take care of business matters before being pulled into meetings. Remember, 7 a.m. is not a firm call time. It is always important to develop a relationship with the person you will be calling and use your judgment on whether a call before work hours is necessary.

First thing in the morning is better than end of the day

Collection calling is probably not the first thing on your to-do list that you want to do. Nevertheless, it is important to call early in the morning to reach people before they become busy with anticipated tasks and meetings. By calling in the morning you are more likely to get a same-day decision on a payment schedule, even if the client needs to contact you back later in the day.

What time of day is most successful for your business’s internal debt collection calls? 

What Makes a Good Debt Collector?

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Businesswoman making a call - C2C ResourcesAs a business owner, your collection call team will lead you to increasing cash flow. But is a good debt collector born with “it” or taught “it”? For small businesses and start-ups, finding the right person on the team is particularly important because often team members wear multiple hats; only needing to step into the role when needed.

We think the right person has a combination of the right personality traits and proper training. Don’t always go for the sales person or accounts receivable person on the team. While they may be directly related to the process, they may not have the personality needed to deal with potentially intense situations.

 

When considering a team member, look for the following traits:

-          Problem-solver: Often driven to find a solution, the problem solver is going to approach the situation with unique ideas. They will be results driven, even if the debtor becomes upset during the process.

-          Self-motivator: Getting on a call is nerve-wracking because the debt collector does not always know how the debtor will react. By having someone with a keen sense of self-motivation, they will be driven to get the work done.

-          Tenacity: If a debtor is persistent with providing reasons as to why they cannot pay, the collector will need to be just as persistent to make sure that the call ends with an action item of next steps in the payment process.

 

And, provide the following training:

-          Selling: The debt collector on your team needs to be able to prove to the debtor that they must pay. This is very similar to a salesperson’s role. By providing the team member with proven tactics you can prepare them for the most challenging calls.

-          Customer Service: While it may be a good idea to pick the most tenacious person on the team, they also need to have good customer service skills. Being too controlling during the situation could turn the customer off and lead to no payment. The ideal candidate would have a good balance.

Finding the right person on your team to handle debt collection calls goes beyond the ability to pleasantly interact with customers. It requires a combination of skills to be effective.

Do you have the right person for the job on your team?

Is it Time To Accept A Payment Plan?

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Dollar sign, Collection Agencies, C2C ResourcesA cash flow problem is almost always the reason a customer requests a payment plan. The big question is; how do you determine if that’s the best course of action for you and your business?

Before you can make that determination, you need to understand your customer’s need for the request. Find out the backstory. What are the circumstances surrounding the request? Write down as many details as your customer is willing to offer.

The next step is to validate the claims. Is your customer telling you the truth?

Talk to other creditors to see if they are hearing the same things you are. Try looking at your customer’s last 6 months worth of Merchant Statements to see if there’s been a decline in credit card traffic. You might even try talking to their bank to see if a check would clear if they were to issue you one.

A payment plan isn’t the best solution to account that is past due, but it’s certainly better than not being paid anything at all. If your customer’s story checks out, working with him in any way you can (within reason) may help you keep a good customer who is simply going through a tough time and in the long run, may be the most profitable option.

Payment plans are one options that may serve you well.