PUMP UP THE A/R
The Whole Truth and Nothing but the Truth!
APRIL 2012
What’s that old saying, “the truth shall set you free”? Well, truth is I just plain forgot it was my turn in the barrel to write the Pump Up the A/R. And when a customer tells us the truth, it usually Does set their order free – free from being on Hold. It’s sometimes easier to tell when someone is telling the truth, as opposed to a lie. Years of experience working in this Department, develops some really great gut instincts. And, I would imagine a long list of excuses heard on a regular basis.
The more questions you ask, the quicker you will get to the truth of the matter. When our customers lie about why we have not gotten paid yet, they’re hoping that we will accept what they are saying and drop the subject. Our job, our A/R Team, needs to Ask, Ask, Ask! The more questions you ask, the more uncomfortable they become, and eventually sending a check becomes much more appealing to them than having to answer more questions – and having to think up some more excuses!
Listed below are some of the most common Excuses you have already heard, or are apt to hear eventually. When you read them, Think about how you have responded to them in the past, and better yet, how you Will respond to them in the future.
- Our computers are down and we cannot print check right now
- We never got an Invoice
- We must have misplaced the Invoice
- The infamous, The check is in the mail!
- No cash flow due to an illness and medical bills
- We only print checks once a month (and it’s usually said on the 1st and they print on the 30th!)
- We are having serious Cash Flow problems
- We’re expecting a large check from a big job; we’ll pay you as soon as we receive it
- Our customers are Not paying, so we can’t pay you until they pay us!
- Our Boss is out of town and no one else can sign checks
- We returned merchandise and are Not paying until we get a credit
- We need proof of delivery Before we can pay
- We can Only pay from an original Invoice, not a Fax copy
- Accounts Payable is on vacation this week
- I show we don’t owe anything???
If you have any that you seem to hear quite often, please, Share them with the Team! There’s an old Yiddish Proverb, “a half truth is a whole lie”. Learn to separate them; recognize them; STOP them in the middle of the lie. For example, when they say “our computers are down and we cannot print a check…..” let them know that our computer goes down too, and we just type or hand write a Manual one – the bank doesn’t care! While they’re telling you they did Not get an Invoice, tell them “No problem, I just pressed the button and a copy will be in your inbox in just a few minutes!” When they give you the old “the Boss is out of town and no one can sign a check…..”, your immediate response, “not to worry, we don’t require a signature for a credit card given over the phone!” The bottom line, you’ve got to Think Quick, and Answer Immediately!!
Preparation is key in the department. In other words, do your due diligence BEFORE you make a collection call. Know the history of the account. Are they a repeat offender? Do they have a history of promises and if so, were they kept or broken?? Have they used the same excuse on more than one occasion? (and this is where Good detailed note keeping comes into play – these Good notes will help in future credit decisions and if need be, may be invaluable in litigation!).A Good Memory doesn’t hurt either. I’m always amazed when here in MI, I ask Jenny about a particular account and she Immediately punches up the account number from memory; and, she can tell you just about anything you need to know about the account too. When it’s something to do with a Credit for a Return, shipping, etc., I make sure I’m asking in earshot of Sharon – whether she was involved or not, if she saw it, touched it, or just overheard a conversation about it, she Will Remember and almost always knows something about it! She also knows the customers who Return merchandise on a regular basis.You get the idea. Know who and what you are dealing with, put notes in the computer, retain as much info. as possible and be Prepared for what they may throw at you.
It’s also important to be sure that you are talking to the right person(s). Identify right away who it is that you Need to speak with. Too many times they’ll try to brush you off telling you that you need to talk to the bookkeeper. Well, find out Who the bookkeeper is – get a name and ask for a Direct Dial number or extension, and even what their hours are. If you have made a couple of calls already and can’t seem to get them And have had No return call from them, you most likely are Not going to hear from them. It’s time to go higher up, and explain that you have had No response and Must speak to someone in Authority now. There’s no need to yell or raise your voice; and you should NEVER, under any circumstances, swear. Never let it become personal. Don’t threaten, but in a professional business-like attitude it’s ok to politely let them know that legal action is your recourse if someone will not speak with you to resolve the situation. Long conversations probably mean the customer is stalling you, or trapping you in the buddy syndrome. Remember, the object of your call is to Collect Money, or get a Commitment, Not to become buddies with the customer or win arguments. Although, it doesn’t hurt to be just a bit chummy with the person paying the bill! It’s said that user friendliness can disarm even the most cantankerous accounts payable manager! Remember to say Thank you, or as I always say, “Thank you, my friend!”
To avoid some of the headaches later, be Proactive! With new accounts, especially if large amounts of money are involved, be sure to make it clear that Prompt payment is Expected. Train the customers from the inception of the relationship. Clearly explain Due Dates and Collection Policies to new customers as soon as the first payment becomes One day past due! If the new account is slow from the get go, tactfully jump all over it!
There are other ways to be Proactive too. Make sure that your Invoices are correct the first time they are printed. If not emailing and/or faxing, make sure Invoices are printed and mailed Immediately. Believe it or not, some companies take a week or more to get invoices in the mail, and then their customers start the clock running Not until the invoice hits their desk – Not on the Invoice date. Identify recurring problems with a particular customer and get involved (and get others involved if need be) in resolving the problem, even if it’s something outside the credit department. Anticipate, wherever possible, the customer’s needs. And at the same time, become the squeaky wheel that gets paid first. Begin follow-up efforts Earlier – Don’t Procrastinate or wait for things to resolve themselves.
There is an old saying in the credit profession that says, and I quote, “A sale is a gift until the invoice is paid”. It is the job of our A/R Team to turn those gifts into sales. The longer an account is on past due and on Hold, the less likely it is that it will be recovered. Communication is key. Communicate Immediately with a past-due customer. Be Proactive, Professional, Positive, and Prepared, and finally, you Will be PAID!
Your Belated, but Beloved,
JE – KBC MI
xoxoxo