How to Get the Dough When the Checking Account is Low

I had lunch with one of my Solutons Forum clients today, and whose cash flow had dried up in the last couple of weeks. So, I thought I’d share some collection ideas with you:
1. Have the sales rep make a call to the decision maker to whom he/she sold the product or service. Withhold payment of commissions until the bill is paid, or put reps on a paygo system….they get paid when the bill gets paid.
2. Take credit cards, all types. It amazes me how many businesses don’t do this on b2b sales. Be prepared to eat the credit card charges, rather than billing them. Even for American Express, which can be pricey.
3. Offer cash discounts for prompt payment; it usually takes 2 or 3% net 10 days to get anyone’s attention. Don’t forgive it if a large account is late in paying and still takes the discount, either. Larger companies will try, but forgiveness is all part of the negotiated relationship with the customer.
4.Charge 1.5% for late payments, but don’t nickel and dime it…I’d say over 10k in outstanding balances makes it worth it. Again, it’s negotiatble, and part of the customer relationship.
5. Give your CFO or collector type free rein to cut deals, the main idea being to have the customer pay more than the minimum due. Al businesses are going through cash flow issues this time of year.
6. On international accounts, they take longer to pay, and don’t operate by the same standards we do. You don’t really want to be in court over collections, but check out their trade reputations. You might have to do a little adverse p.r. in trade publications.
7. As a last resort, you can factor troublesome recevables, but this is expensive (figure 30% per year) and might harm customer relationships.
OK, let’s hope one or two of these are things you haven’t tried. If you’ve got any other techniques that have worked for you, let us know by return email or blog.
JH

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