Here are my thoughts for maximizing collections during a recession or a disrupted market (e.g. covid).
If, as a sales rep, you are subject to a commission/compensation charge-back for uncollectible accounts, take full responsibility for the process/outcome. Companies provide business office support for collections but when your compensation at stake be sure you’re on top of it! Don’t be intimidated about asking for payment, it is the final fulfillment of the of the contract. Because you service your accounts with diligence, integrity, and great follow-through and you should expect to be paid the same way.
Companies should consider giving a discount for payment with order. Most clients welcome the discount, and most companies welcome the accelerated funds flow.
Addressing collection issues early always provides a better outcome. If you start too late in the collection process, even if the client is willing and able to pay, you run out of time (and income).
Collecting past due accounts is “selling” the client on paying. The only two questions that need be answered are: how much you are paying and when. It can take a fair amount of time/finesse/excuses to get those two answers.
When clients are cash strapped, they will oil the “squeaky wheel”. You should be the most persistent and professional vendor asking for payment. Never make it personal; it’s business. Some reps believe being too assertive about payment will affect their future ability to sell the client. If your client relationship is that precarious, you likely won’t have long-term success with them.
Clients respect reps who display a direct approach with exact information: dollars owed, and age of the balances. In a larger organization it is more productive to go directly to the accounts payable department. Those staffers will typically be very candid about the status of a payment.
If an ongoing account has gotten behind in payment, design a solution that keeps the client from canceling and gets their bill current. Construct a payment schedule which includes the current balances plus past due balances amortized into a payment timetable that works for both you and your company. Once agreed-upon have the client agree in writing by email/signature.
It is extremely effective to get your sales management involved in a quick and friendly joint telephone collection call with the client. It subtly puts the client on notice the payment issue has reached a higher level.
During these extreme times of Covid, if your company is able to work with a valued advertiser who has legitimately gotten into a tight spot, the help/support in a time of need will be remembered for a long time. It’s a strong demonstration of your partnership.
Most companies are set up as an independent entities (IE: incorporation, partnership, LLC etc.). Have the cash-strapped client sign a personal guarantee. It states they’ll personally guarantee the payment of the contract aside from the corporate entity. Many clients are reluctant to sign this but may do it to keep their advertising lifeline alive.
There are more strategies/tactics involved in effective account collections than I can cover here. If you’d like more in-depth information, please email me.
Next week: Involving senior management in the sales process
Send me your questions/comment at: KevinJGephart@gmail.com
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