Try sending statements every week for commercial past due accounts (invoices to customers granted credit which have not been paid by the agreed upon due date). You might think this is excessive but consider that the personnel in your customers’ accounts payable departments have hundreds of vendors to pay.
You need to stand out when asking for money. There are lots of people asking for money so you must speak up; you need to stand out from the rest of their unpaid vendors. You decide the time period to contact your customers, but pick one more frequently than once per month (standard practice) and be consistent until you are paid.
Try some of these collection tips and ideas:
- Send statements more frequently. Fax your accounts receivable statements or email them and do it more frequently than the rest of the market. Be obviously persistent and consistent and of course, always polite.
- Handwrite the person’s name to get attention. Be different. Get their attention. Handwrite on the statements before forwarding them in large letters or cursive writing. You may be thinking, “No one does that!” and you would be exactly right. You want to do what no one else does. You want to get their attention.
- Circle items you want paid. Circle the items you want paid and write instructions to the recipient indicating why these are late and what you expect for the vendor to do; be clear that you need these past-dues paid.
- Use the AP clerk’s name if you know it. You need to ask for your money first before all of their other vendors are starting to squawk. You may be inclined to just stamp the statement and send it, but you miss a unique opportunity of handwriting the person’s name on the statement, something they rarely see these days. You want attention to your request and this will do it.
- Fax/email first, call them on the telephone later. When you fax or email versus calling the individuals; it is appreciated. If you fax or email an accounts payable person, they can take their time to research your past due invoices without having to stop and take your call. You are being polite by sending something that allows them time to do investigation first. This is better than calling them, catching them off guard and causing them have to answer while you are waiting on the telephone. Faxing or emailing ensures they get your message but also gives them time to research an answer so they can call back. Most will, some will not, but it is worth the first effort. This works well with commercial and mostly likely does not for individual accounts.
- Handwrite something pertinent, unexpected. Handwriting gets attention because it is rarely seen anymore. Most companies are sending out computer generated statements each month if they send any out at all. When they send them, they rarely actually see the statements sent electronically. They are also virtually worthless because few pay attention to them; if sent in email, they are labeled as spam to be forever lost.
- Use the payers’ names. Address the AR statements to an account payable person’s name if it is known. Call the company’s switchboard and ask them for the AP clerk’s first name if not whole name. They are used to these inquiries and will normally provide it for you.
- Update names in your system. If you have the wrong person’s name on your statement, they quickly tell you so you do not continue to bother them. Take the opportunity when someone tells you that they are the wrong person to ask who the right person is and how to contact them.
- Ask who the current contact is (who pays you?) at every possibility. Ask immediately and you are more likely to get an answer in order for the recipient to get you off their back. This direct communication also is taken these days as aggressive, so if you repeatedly send these out to the wrong person, they will get perturbed and tell you the right person to contact so you cease bothering them. Be polite; remember that you just want a person to contact who can pay you.
- Handwrite another notice. Handwrite another note to the correct accounts payable name and send it out again. Repeat this until you get to the right person. Take advantage of the fact almost no one writes so your email or fax will be noticed most of the time. Most companies rely on dull automatically produced computer printouts which generate very little attention once received. If you take a few moments to pen the recipient’s name, you will fare much better when they spot themselves on a fax machine or on an attached email from an address their receptionist gives you.
- Resort to the phone. When all your faxing and emailing efforts fail, get on the telephone and call them every day until you get to speak with them. When the handwritten statements do not work and you have sent three or four unanswered emails, call your past due accounts. When they do not respond, call their switchboard and request the person’s supervisor’s name and ask to be transferred to that person. If necessary, as a last resort, call the buyer and ask him to help you get paid. When your firm is owed money that is growing older by the day, the last relationship you need to worry about is the one held with the buyer.
- Hold shipments if all else fails. Hold this customer’s remaining open shipments when the past due customer refuses to return calls. Instruct shipping personnel they are not to ship until given instructions from your collections department. Ensure this shipment is quarantined and no more work is invested in its production until you are paid.
- Before legal becomes involved, drag in sales. As a last resort before legal collection efforts begin, drag in the sales person assigned to the customer to intercede. At this point your sales person who has a customer that is non-responsive and non-paying. Let your sales rep know his customer’s orders are currently on hold until you are informed what is wrong and why no payment has been received. Sales people get angry when the problem grows to this point because the commission for this potential write-off of net sales will ultimately be deducted from their bonus checks. Use this remaining available leverage. When you need to be paid, you must capture the customer’s attention and use the only leverage you have. Your firm deserves an answer as to why they have not called you back or explained their non-payment. You need to be paid.
- Your sales rep must call on them. Your sales representative needs to visit the customer’s buyer to ask for assistance in getting the invoices paid. This is a last resort but if there is anyone else on your staff that can help, use them versus the sales person. Using the customer’s purchasing agent is effective because it causes embarrassment for a position that normally should not have to be drug into a collections mess. Do it if you must to get paid. Drag everybody into the fray as early as possible before resorting to costly legal action where once it is turned over to an agency, your company no longer gets all of the monies due, but only a fraction of the original amount. Drag everyone into this collection effort before releasing this collection problem over to an agency.
- Your procedures timeline should trigger a collection firm. At some point in the future (you decide the time period cutoff for your company), turn this past due amount over to a professional collection agent or lawyer. There is no reason to continue to throw money away if the customer is in financial trouble. There is also no reason to continue to try to collect from a company in trouble. The earlier you turn an account to collections, the lower the fee and more likely it is that you will be paid.