Show Me the Money! Cash is King Collections Procedure by Tom Luby

Show Me the Money!

Cash is King Collections Procedure Tom Luby, Business Consultant and Fence Industry Spokesperson

WHO WOULDN’T LIKE TO INCREASE THEIR CASH FLOW, DECREASE ACCOUNTS RECEIVABLE BAD DEBT AND IMPROVE CUSTOMER RELATIONSHIPS? THAT’S ACTUALLY WHAT A SOUND, WELL-MANAGED ACCOUNTS RECEIVABLE COLLECTIONS PROCEDURE CAN DO FOR YOUR FENCE COMPANY.

Excessive accounts payable will sink any company, and the best assurance that you will get paid when the job is complete is the one that addresses collections at the earliest possible stage, is consistent and thorough in dealing with past due accounts.

I will address collections for residential accounts since commercial work is a completely different animal. For residential customers, your first responsibility for collecting money due is to be sure the customer is satisfied with the job, crews and overall work. It is impossible to collect money from unhappy customers so do not assume anything about the job: call and ask. This call must be perceived as a customer satisfaction call and not a call to collect money.

Naturally, your intentions for making the call are primarily to get paid, but this must not be obvious. The customer must feel you consider them to be very important and their satisfaction is paramount. Remember, this is done by phone or in person, not by email or a Facebook post. This must be a person-to-person conversation.

This call then serves to promote two very important goals: establishing good will and a professional image in the mind of the customer and helping collect your money as quickly as possible in the process. The customer satisfaction call made in a timely manner is among the most important calls you can make as a company.

Here is an example of what you might want to say when calling a delinquent customer for the first time:

“Hello, this is ________, from ________ (your fence company’s name). I am calling to make sure everything is satisfactory with the recent project we completed for you.”

Pause and wait for a response. If the customer has a complaint, this must be addressed immediately. This is the first phase of the call, the customer satisfaction phase, and it must be addressed prior to moving on to the collections portion of the call.

“Also, I would like to be sure you received our invoice for $____________ dated __________.”

Pause and wait for a response. If the customer has not received this bill, this should be addressed immediately. If the bill was not received, see that a copy is faxed to them and then a duplicate is mailed immediately. If the bill was received and no problems exist that would delay payment, simply respond:

“Thank you, we appreciate your business. I’ll indicate in my records that everything is satisfactory. Can we expect your payment today?” Wait for them to reply.

“If not today, when can we expect payment?”

It is highly recommended that the customer be present to inspect the job upon completion, if possible. If the job was sub-contracted, payment should be withheld from the subcontractor until the problem is resolved to the satisfaction of the company and the customer.

Ultimately, assumptions and procrastination are an accounts receivable collectors’ worst enemy. I have consulted with fencing companies that employ the practice of waiting for the customer to take the initiative to send in the check. They never contact them to see if there is a problem or complaint. This is a very bad idea. If you don’t ask them for the money, many customers will simply never voluntarily pay. Take the initiative, don’t wait.

Regardless of the excuses given, the purpose of the contact with a customer is to get a commitment for payment and collect money that is due while at the same time keeping the customer happy and satisfied. Again, this goal cannot be accomplished simply by sending emails or leaving text messages, you must speak to the customer directly.

As you follow the delinquent account through the collections process, it is essential that you maintain a documented history of the dates, times,