Last week we began a series on collections, a vital part of your customer service. This is often a overlooked process for keeping and building customer relationships.
You may be thinking: "What?! Collections are vital to keeping and building customer relationships? Are you crazy? The reason I have to "collect" from them is because they have not paid me when they were supposed to --- why would I want to keep and build that relationship?!" Simply put, you want to build these relationships, because they have already done business with you and because they do owe you money.
In preparation for this week's article, you were encouraged to review payment terms provided to your customers, how those terms are communicated, and your accounts receivable ageing report. What did you learn? How defined are your terms? Do your customers need a CPA to explain your terms or are they easily understood? How many accounts are 30 days, 60 days, 90 days, or more old? Why?
The starting point for effective collections is your accounts receivable system. To be effective 3 main items need to be present in your system:
- Defined and clearly communicated payment terms for your customers
- A plan to monitor your accounts receivable system that provides immediate follow-up with any customer that has not paid
according to agreed terms
- Collections strategy for any past due accounts