CREDIT MANAGEMENT
CREDIT MANAGEMENT
LATE PAYING CUSTOMERS
By Wasilwa Miriongi
The common credit management saying goes that “ Many companies blame nonepayment or slow payment on the part of the customer when the reality is that they are the ones at fault ”. As a credit management professional and practicing debt collection I have always been confronted with this question , Do customers pay ? Some even dramatize it so much that it looks impossible to collect a payment .
Next time you call a customer to follow-up on an invoice , it is important you know how to sift through the excuses they give over the phone or in an email . Unless you know the precise reason why they are not paying on time , you may not be able to convince your customers to pay their invoices before their due date .
As Jay Goltz puts it , account receivables management and collecting payments is “ one of the most surprising , upsetting and dangerous challenges ” small businesses face on a daily basis . So , you need a first class game plan .
With my understanding of collection practices and with my debt collection experience running over twenty years I have listened to many collection excuses , when you call and you are
‘‘ The major objective factor that can be easily measured in the collection industry is the recovery percentage . How much you have turned over verses how much the agency has collected . How is the Agency doing in collecting the accounts you have given them ? What can they tell you about how they are doing it ? You want complete transparency . ’’ told we are waiting for approval from such and such a department you will realize the nature of the problem .
Let us now delve on the reasons that slows down payment in a company which may not have come to your attention . Your delinquent accounts will usually have customers from ALL of these categories . For superb account receivables management , you should know how to identify each customer ’ s category , know the reasons and figure out how to act accordingly . Here ’ s a basic guide that might help : Inefficiency of your customer
If you are following up for payment of an invoice which passes various approval levels some departments are even in different locations then you are following up a customer who seems to have very inefficient structures in processing your payment . Most likely they have personnel issues such as overworked staff or even understaffing in departments like accounts payables , purchasing and the managing director can be a source of delay . This is a pointer to serious overdue situations that you may be required to take actions to remedy .
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