On the face of it, “collections and customer service” seems counterintuitive; however, nothing can be further from the truth when trying to collect from a customer. Let’s examine why.
In our Dispute and Resolution article, we discussed that slow payment or non-payment of invoices is not necessarily the indicator of a customer solvency issue. On many occasions, PCM Corp receives claims against Fortune 100 companies, not because they cannot pay, but because they refuse to pay until a problem is resolved. Not paying an invoice can be your customer’s passive-resistive way of getting your attention.
Customer Service First
We should really call it “customer service and collections” because customer service is the first step that should always be taken when you experience a slow-paying customer. Remember, you want to preserve the relationship after collections. Your number one priority should be customer satisfaction…taking care of their needs to get your needs met.
A client of ours has implemented a brilliant way of using a customer service touchpoint to enhance their collection process. His firm calls the customer immediately upon the delivery of his goods to confirm all is in order.
- Did the shipment arrive on time? Check.
- Was the shipment intact and not damaged? Check.
- Our invoice was included in the packing slip, did you receive it? Check.
- Does our invoice contain the correct pricing? Check.
- So there are no issues that would prevent your accounting department from processing payment in your usual efficient manner? Check 😉.
Notice the bit of fun you can use to make this contact more enjoyable for everyone.
More importantly, can you see what this supplier is doing? His firm gets out in front of the usual excuses for slow or non-payment within his industry. If there is an issue, it gets resolved immediately instead of aging out 30-60-90 days or longer.
Your customers would also prefer that everything would work smoothly between your respective organizations. No one enjoys conflict or bad news; however, in business, conflict and bad news are sometimes unavoidable. This article also offers some great tips: 4 Ways to Maintain a Good Customer Experience During Collections.
Report Aged Trial Balances
Which vendor would you rather work with—one that shy’s away from the problem with their product or service or one that immediately owns it and accepts responsibility?
I have infinitely more respect for my vendors who own the issue and help me to resolve it quickly.
Anyone who has been in business longer than 15 minutes knows that mistakes happen. The vendor that makes a mistake and then makes it right earns my respect and trust. I won’t enjoy the problem- BUT I will work with that vendor and not drop them because I know I can trust them when mistakes inevitably occur.
There is also pressure on your customer to have issues resolved and avoid collections.
- The first pressure is simply supply-chain disruption. No one needs a vendor holding a shipment of vital goods when you need the product to service your customers.
- The second issue, and not readily understood, is their company credit rating.
We encourage all companies that extend credit to customers to report your aged trial balances to a commercial credit bureau. The data furnished by creditors helps other creditors to make sound business decisions and contributes to a healthy economy. When a customer withholds payment, the late payment is reported to your customer’s commercial credit report and lowers their credit score.
Since negative data can impair the customer’s ability to get additional trade credit, try and always put collections and customer services together. There should be a sense of urgency to resolve outstanding debts and protect your business relationships.
About PCM Corp
PCM Corp specializes in credit control and credit recovery. Our credit management expertise spans the entire credit-to-cash cycle. Let us help your company get paid faster.
For more information, please call PCM Corp toll-free at 1-866-206-1629.