Tips & Tricks: August 2010 Archives

Earlier in the week I spoke with a user that was not printing the cash-out sheet as part of the Daily Sales Report. Instead they were reconciling payments to receipts - a much more complicated way of getting the same result.

Users are strongly encouraged to print the cash-out sheet each day and just balance to that. It's quick and easy and gives you everything you need.

There is a great article on the Inc. site about how CRM software like FloristWare can help you build stronger relationships with your customers.

The second point really jumped out at me:

2. Rewards
Every industry has companies who do reward and customer loyalty programs differently. It is a very simple form of saying "thank you." And particularly of late, loyalty programs seem only to have grown in popularity. Why? Customer loyalty programs are the next-generation marketing strategy. It is a viable and measurable marketing tool that small businesses can use to retain their customers and grow their business.

User feedback has always indicated that the points based incentive program is one of the most powerful features in FloristWare. Seeing it mentioned as the second point in this article makes me even more excited about.

I hope all users take advantage of this feature. All florists may also benefit from this material on designing a successful points program.

There is an excellent article on the American Express OPEN Small Business forum called 5 Ways to Make the Collections Process Easier.

We hope all FloristWare users will take the time to read it. Each of the five points they mention are great and we are going to examine how FloristWare can help with each of them.

1. Plan for collections from the start

...recommend making your first contact with a new customer with the collections process in mind. "Be careful on the front side in who you extend credit to," Brumback suggests.... Make a copy of the person's driver's license"...

Many florists extend credit to anyone who asks for it. People from outside the business generally agree that florists are far too generous in granting credit. Florists generally disagree - they often feel that credit is expected and if nothing else may give them a competitive advantage.

It is your decision to make but credit is a privilege and not a right. If a customer asks for credit you have a right to ask for certain things in return.

At the bare minimum you should have the customer complete a credit application. You probably are not going to run a credit check but this gives you some information about the person/business you will appreciate if you ever have to collect. Ideally you will also get a credit number for security.

We believe credit applications are so important we first included them as a feature in FloristWare v2.5.

Any customer that requests credit should be required to first complete and return one of these applications. An even better approach is to ask them to complete the application and actually pay for their first purchase while you review it but, at the very least, get the application completed.

Next Tuesday we will talk about #2.

Today we are going to look at how FloristWare can help with item #2 on the excellent article on collecting receivables from the American Express OPEN Small Business forum.

2. Put a standard system in place

... If your invoices don't go out on a regular basis, a past due account may be more a matter of the client not realizing that there was an invoice than choosing to ignore it...

Many florists are accustomed to sending invoices/statements once a month. Typically this is more out of habit than anything else.

There was a time when AR orders were written on paper, rung through a cash register and then left for a bookkeeper to enter into an Accounts Receivable system at some later point - usually once a month. Statements would then be run (and it usually wasn't easy - another reason for doing it infrequently).

Once they switch to FloristWare they continue doing things this way but we hope they will consider changing. FloristWare gives you the option of emailing/faxing/printing (ready to mail) invoices as soon as a sale is charged with a single click. All users should definitely do that!

Why? You will get paid quicker. If a customer orders on (for example) August 2 why wait until August 31 to bill them? You definitely won't be paid until they get the invoice so get the invoice to them as quickly as possible. If you want to be generous with terms you can specify thirty days but start the thirty days as soon as the sale is made - not almost a month later when you finally get around to invoicing it.

But there is another important consideration. If you wait weeks to invoice the flowers are almost certainly already in the garbage. People are far more inclined to pay quickly if they are still enjoying the item. They will to some degree resent (and drag their feet) paying for something they have already discarded and can barely remember.

That last part about remembering is very important too. When someone gets an invoice while the purchase is still fresh in their minds they are far more likely to pay quickly. If they get it a month later they hesitate. "Flowers? Did I order flowers last month? I don't remember. I'll have to check that out - later". At this time sending payment involves some research. That means work - work they are very likely to put off until you start chasing the payment.

And the last reason for invoicing immediately? FloristWare makes it so easy! You just click a button and it's done. It's actually more work to generate statements later.

Please - take full advantage of FloristWare and send invoices as soon as sales are charged.

On Thursday we will talk about #3.

Today we will look at how FloristWare can help with item #3 from the excellent article on collecting receivables on the American Express OPEN Small Business forum:

3. Remember that your customers are valuable

In a collections situation, there's a tendency to see a client who hasn't paid as the bad guy. It's completely understandable, but an approach based on that viewpoint is almost certainly going to put a client off. After all, no one wants to feel like they've done wrong, no matter the actual circumstances. Finding an approach that takes the client into consideration is crucial.

Barry Maher may now be a motivational speaker and consultant, but he made his mark as a salesman and sales manager. Maher says, "For me, the key to dealing with customers who are behind on their payments is to treat them as valued customers. To avoid embarrassing them, we start out by 'just touching base' to see if the payment fell between the cracks or there was some oversight. Then we show understanding, allowing them to save as much face as possible and, at all costs, avoid getting their back up, so they become defensive and look for reasons why they shouldn't have had to pay in the first place."

This is true - customers are valuable. It's also important to remember that not all customers are created equal and you should use the AR tools ine FloristWare to help you tell them apart.

For example - you may have a long standing customer who buys a lot, generally pays well and is starting to fall behind a little. That seems like a good customer who is in a rough patch. You want to work with them so that you can get your money and continue the relationship when things get better. You don't want to anger them to the point where they start buying their flowers elsewhere. In addition to losing that future business you also increase the chances that they decide to not pay at all.

Another customer may have bought a lot but not made payments. This is an entirely different thing - a customer who doesn't pay isn't worth very much at all. There are lots of people and businesses that do this - go to a new vendor, start charging and not paying, until they get cut off and move to the next one. If a customer has no payment history you have reason to be concerned and you need to stop the bleeding. Those may be pursued more aggressively - when their is no relationship and no payment history it makes sense to (at the very least) suspend the account.

Another situation might involve a customer who used to buy a lot and pay well. Suddenly the payments have stopped and you are starting to worry.

What is happening with their purchasing? If they are not purchasing at all as their balance gets older a couple of things might be happening. They might be cutting spending so they can get current. They may also have moved on to another vendor once they got the impression you were losing patience with them. Once that happens it will be tougher to get payment - and any future business - from them.

Collecting receivables is tough. You want to collect your receivable with alienating your good customers. That means you have to have to be careful and review it on an account-by-account basis - don't just send the same threatening letter to everyone. Use the tools in FloristWare (Payments by Accounts, Purchases By Account, Aged Receivables By Account, etc.) to help you differentiate between your accounts and deal with each in the appropriate manner.