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.
