Selling more is not important, how much you cash in is!
This is about sales volume and overdue pending. The job is tough but some companies do it brilliantly.
Sales management and dues collection
If potential customers balk too much, there may be a good reason to leave them unsold. Collection experts and sales reps agree that salespeople are in the best position to evaluate the creditworthiness of customers. We should not just drive in the parking lot and go into the building. Drive around the plant. Is there cargo being loaded? Are machines operating? Inside the offices, are employees busy? We should not embarrass to ask how business is, or we could be sticking our company’s neck out financially. We don’t want to do that.
A few red flags which many reps watch out for-
– When accounts don’t haggle over price. This could mean they have no intention of paying at all. The customer who pays promptly is going to fight for the best possible deal.
– When credit applications are incomplete and simple things, such as the name of the prospect’s bank, are omitted.
– When only key purveyors are listed as credit references. Look for references with about the same size and importance as our company.
If an account becomes delinquent, timing is crucial; the older a debt gets, the harder it is to collect. Salespeople often fear that collecting will alienate a customer. Not true when skillfully employed, collection tactics can doubles as customer service strategies. Use the past due account as an opportunity to say something like by the way, was everything ok with our order? Customer service problems often show up as a receivables problem. If something went wrong with the product or service, the customer may express himself by not paying. Before we do anything, determine whether the past due account is an oversight, an objection, or a stall. Then at least we know what the score is. When asking for payment, be direct. There is no magic word; the nice way of asking for money is to ask for it. One of the biggest mistakes people make is to ask customers to pay something towards the debt. Ask for the full amount. Something is bittern than nothing but it’s not better than something more. Explain that the price granted the customer was predicated on credit terms accepted. More ammunition- point out that non payment can adversely affect the customer’s credit record and its chances for bank loans that may be needed to build the business. If customers are still going to work they are still in business, and if they are still in business, they are paying someone too.
Delinquent customers often have their credit privileges revoked and can only be supplied on a COD basis. The problem is that they usually carry the unpaid balance. Reps negotiate with their customers to pay a percentage of the old balance with each COD order. That way, he reasons, customers continue to get goods, the company eventually gets paid in full, and the salesperson winds up a hero in the eyes of both sides. Perhaps the deadliest pitfall for salespeople and for businesses faced with delinquent accounts is the belief that bad debt can be made up by simply selling more goods or services. Maintaining an ongoing relationship provides a better chance for repayment, agree experts. The last person we want to stiff is a friend.
Sometimes the most difficult thing to collect is our sense of humor. Here are some of the maxims-
i. Inquisititive: we better realize that when customers list references on a credit application, they are naturally going to list their prime references. Find out why they switched, the customer could be under a wave of debt. It’s possible that suppliers have cut him off.
ii. Move swiftly: it’s time to take action when a client especially a new account is 15days past due. If you don’t follow up, you’re training them to be late payers.
iii. Don’t be shy: collecting is a competitive sport. If you are not getting paid, someone else is.
iv. Keep talking: verbal communication is more personal, but if you have to contend with 200 accounts, you may want to fire off notes.
v. Get your priorities straight: if you don’t have time to call every one of your delinquent accounts, begin with the largest debtor.
vi. Know when to say when: don’t wait 90 or 120 days before cutting off credit. Sixty days past due is the appropriate time to sever credit privileges.
vii. Know when to back off: the worst thing is to get emotionally involved, third party collection firms are specialist and have the advantages of being focused.