You can collect the overdue receivables. All it takes is a little planning and a commitment to follow the plan. A sale does not take place until the money is in your bank account. Past contingent can put a squeeze on many aspects of your business as it stifles its very much needed … cash.
Your past due account issues can be brought to bear in the course of days or weeks of proper design and implementation of a collection “system.” When I refer to “system” I do not refer to a machine, but a step-by-step process that is followed with all your accounts.
Several years ago, I had problems with my receivables. When I look back, it was because I treated them nonchalantly at first. I might send some letters or pick up the phone when I had some time or when the cash flow became a problem. Unfortunately, I was already in a stressful situation at this point and it had a definite detrimental effect on my efforts. I had no clear system and it cost me a lot. At a time of almost desperation, I developed a system that I tested and measured repeatedly for efficiency and continue to adapt from time to time, but for the most part I still use the same system with the same scripts that I developed then. The system not only streamlined my efforts, but it also dramatically reduced my outstanding past money almost immediately. Not only was I able to give my cash flow a much needed shot in the arm, it also helped prevent me from ever getting into this position again.
The first step in your system is to determine which accounts are in need of follow-up. In most cases this will be a fixed amount on due days. But keep in mind that contact too soon can cause your customer to be offended while calling too late may make them think that it is not important for you to collect on their account. It is very important that you use a proven, time-tested reference here to determine your intervals. Either of these situations can result in a delay in payment from your customer.
Second, you MUST take the right tone regardless of your mode of communication. Your written communication as well as your phone calls must be scripted well in advance and only require the insertion of the account information such as name, address, amount, etc. Survey after investigation has shown that this is the most effective collection technique. There are many reasons for this, but one of them is without a doubt knowledge. The more the script is delivered, the more confident you become in knowing what to say and when to say it.
Shortly after implementing your system, you will learn almost all the answers you get from your customers and how to respond to them. It is strongly recommended that, in addition to scripting the wording in your initial contact, you also prepare scripting for your most common answers. In this way, there is never a question of what was said to whom and when. In addition, it also sends a clear message to those reappearing that you are seriously looking at your fundraising efforts and that you will not go away until payment is received.
Your efforts, when assembled, at the right intervals, with the right scripts, clear most of your previous quota within 1-2 weeks. Wouldn’t that be a nice addition to your bank account?