Langdon: Bad Accounts Sap Selling Time

John Wolz

If you reduce accounts receivable, you�ll have more time to spend selling, accountant Bob Langdon advised the Industrial Distributors Association.
�Who takes your time? Eighty percent of time is spent on lowest-margin, profit-draining customers. Time spent on them is time slighting your best customers,� Langdon pointed out.
In the workshop on �How to Get Paid / Are You Tired of 60+ Daze?� Langdon emphasized that reducing accounts receivable also improves cash flow, yields a higher return on investment, lowers bad debts and even increases sales.
Not only will you have more time to sell, but �customers are more likely to buy when they are not past due. You get more repeat business,� the author of Managing Your Business for Profit maintained.
Instead of slighting your best customers, reward them with such benefits as a toll-free number for service calls, which are �answered by the best customer service employees who are empowered to make decisions to satisfy this customer group.� Langdon pointed to airlines special numbers for passengers who have flown more than 100,000 miles. �You can be sure frequent flyers get more attention than the once-a-year vacationer.�
� �If you can�t move a 60-day customer over a period of a year, you have a problem customer.�
� Cut off slow-paying customers. �If you don�t cut him off, you will lose more now rather than less later.�
� Heed the old saying, �An account well opened is an account half collected.� Langdon advised. �Good credit risks are accustomed to good credit procedures. Have sound credit procedures that even the owner should follow.�
Collecting Delinquent Accounts
� Talk to the right person: �I�m calling Mr. John J. Marshall,� then pause and get a firm answer before proceeding. �This is a more effective way to start your collection call. It is specific � the name and initial are given. It arouses curiosity as to why you are calling Mr. Marshall. Your pause encourages an answer so you will know for sure you have the right person.
� Tell the purpose of the call: �As you know, Mr. Marshall, you have a small balance due on your account at (business name).�
�The �as you know� opening remark is a good way to get agreement or to bring out any misunderstanding about the account,� Langdon explained. �The �small balance� idea keeps your customer�s curiosity alive and leads to some response. After stating your purpose, you pause. This indicates you expect an answer. Wait for the response. Keep waiting. When your customer breaks the silence with an answer, you want to be ready to listen. Make notes as you listen. Check for excuses. Be sure the facts are right.�
� Don�t interrupt. �Let the customer with the overdue account get all ideas off his or her chest. Errors in fact will come out as the customer continues talking. Excuses will become obvious � and in many cases you will get a promise to pay.�
� Offer a choice: �Collecting via telephone is easier when a customer is given a choice. You want to give a choice between paying today or tomorrow, not between paying and not paying. �When can I expect your check � tomorrow or Friday?� limits the choice to two days � not six or seven days. �You have narrowed down the choice and indicated that the payment of this overdue account is urgent.�
� Nail down the promise: �You will discover that you will get more money in, as the customers promise, if you will �nail down the promise.� This technique reaffirms the customer�s choice of when to pay.�
Nail down the customer�s response with, �That�s fine. I�ll expect you in to pay this account on Friday. Is that right?� When a customer gives a vague response, such as �sometime next week,� nail down the day like this: �Can I count on you having the money in by Wednesday of next week?�
� Follow up promptly: �Keep a daily file. If they do not pay on the promised day, call again. Your prompt follow-up will let them know you mean business� and that �this is one bill that can�t be put off forever.� \ �2003 FastenerNews.com