Collection of receivables in a shrinking economy is never fun. But it is absolutely necessary if you are to be a good steward of your company's resources. Balancing collections and sales at the same time is paramount.
Rule Number One
If your corporate customer is out of cash, it is dead.
Let's Consider Your Options.
1. Segment Your Customer Base
Find a way to classify your customers by risk.
You can work with a large national commercial credit bureau for collection of receivables, however, you may not get the same data quality as an industry-specific provider. If you are unable to engage a business credit bureau, I suggest meeting with your sales team.
Review each of your active credit customers. Discussions should center on industry and who are your customer's customers. What are they hearing? Was there a recent passing of an owner? Is one of our customers going through a particularly tumultuous divorce? How are they coping with the current economic downturn?
The group should be able to identify and classify clients who represent higher risks than others. Identification allows you to take steps to reduce your risk exposure while looping in sales, so no one is unaware of what is happening.
You may also identify areas of opportunity that help to drive more sales – offsetting customers you've just dialled back a little.
If in doubt about a customer, refer to Rule Number One above.
2. Sales + Credit = Qualified (Profitable) Customers
There's more to do than just the collection of receivables. Credit is also a source of business intelligence. You have credit people on the payroll, so why not use their skills to identify top-quality prospective customers?
Marketing, Sales, and Credit should get together and develop a pre-approved list of potential clients. Once you have developed a comprehensive list of prospective customers, then you can put together sales messaging. The new communications should speak to that specific prospect and must differentiate you from your competition.
Please don't feel compelled to sell on price alone. Perhaps you can beat your competition on quality and fulfillment. If you can dominate in all three, that's a compelling Trifecta!
3. Mine in Your Own Backyard
Don't forget to re-examine your existing customer base for opportunities.
Some of your customers will be exceptionally risky, while others will be highly profitable "Steady Eddie's." Knowing who is your "Steady Eddie" can help you develop special programs specifically for that customer. If they continue to have excellent credit and represent a minimal risk, you might want to consider offering extended terms or increased limits on seasonal purchases.
Now is the time to talk with your customers and find out what's important to them. Perhaps it isn't the ability to order more; it might be delivery or increased quality levels.
No matter the discussion, if you have done your due diligence, your team can confidently negotiate terms to assist with the collection of receivables, which will separate you from your competition.