Do you need to be aggressive to get paid?
With late payment a common bugbear for businesses of all shapes and sizes many SMEs are trying different tactics to improve their credit control and get paid faster. But when all your efforts seem to be failing do you need to be aggressive to get paid?
The answer is simple… No. Never. Absolutely not.
We’re huge advocates of taking a firm but fair approach to credit control. But, once your assertiveness becomes aggression, you risk much more than not getting paid – you risk losing the customer and damaging your reputation and your brand.
Whilst losing a persistently late payer as a customer probably isn’t a great loss, your otherwise good customers won’t respond favourably to over-aggressive tactics. Especially if they’ve always paid well in the past.
So what should you do?
Here are three tips to help you get paid without throwing your weight around and alienating good future business.
1. Never get angry
The job of a credit controller isn’t easy. They’re lied to on a daily basis, complained about frequently and often have to deal with aggressive customers who shout and swear when trying to avoid making a payment. But it’s essential to remain calm and composed…
If a customer is being difficult and you feel like the conversation is getting out of hand take a moment to compose yourself. You can always put them on hold for a moment to calm down – just know there’s a risk the customer won’t be there when you go back. Managing to keep control of your emotions is one of the best lessons a credit controller can learn.
2. Have a clear credit control procedure and stick to it
A clearly defined credit control procedure is a key component to successful credit management.
It’s important to have a staged process (see our credit control timeline for one example) and follow it through with all customers.
Once you have your procedure and you know it works for your business, don’t let customers bully you into accepting poor payment practices. You need to be strict with your payment terms to get the desired results but always be careful not to overstep the mark.
By clearly setting out a day-by-day strategy from the moment the order is placed until the invoice is paid, your accounts receivables team can adopt a co-ordinated and professional credit control procedure.
But avoid escalating situations too early. Whilst threatening legal action as soon as a customer misses a payment may scare them into paying up promptly it’s unlikely to be well received by customers who have a good record of paying on time. There may be a better way to work with them to achieve the desired result.
3. Tailor your approach to each customer
Adapting your debt recovery approach to each individual customer is key to securing the best results. Whilst some might need a firmer stance, others simply need an understanding tact to encourage payment.
Likewise, be careful when sending automated standard letters. Whilst the automation process can save you time, if you’ve already spoken to a customer and know their situation a standard letter may alienate them and damage your relationship.
Assess each individual case and base your course of action on what is likely to bring the best result in that particular situation.
For those customers that require a firmer approach, the involvement of a professional third-party debt collection agency may assist in persuading them to pay.
If you’re finding credit control to be a challenge, we could help. As a leading provider of outsourced credit control we can take on the task for you leaving you the time and resource to focus on your core business activity. For more information on how we can assist you please call 0800 9774848 or email firstname.lastname@example.org detailing your requirements.