Friday, February 20, 2009

CHALLENGES MY CLIENTS FACE - Collections

ECONOMIC DOWNTURNS, RAPID GROWTH, UNEXPECTED EXPENSES,
TIME CONSTRAINTS, COLLECTION CONCERNS

COLLECTION CONCERNS:


No matter what business you are in, the least appealing aspect is to ask your good customers for money. Many small business owners, especially the less established ones, lack the desire and in many cases, the skills to do professional collection calls. They would much rather spend their time and efforts doing what they do best; providing their goods or services. When a job is done, payment, in good faith, should be automatic. In a perfect business world, that would be the case. However, the facts are, most customers expect terms of at least 30 days, and often extend them well past due. In these tight economic conditions we can expect even more reluctance to pay on time.

If done professionally, only as a gentle reminder, your customers will not take offense. Studies have shown that consistent collection calls generate an average 30% decrease in days outstanding. It just makes sense that you will more likely be paid before the companies that don’t make the calls.

Most large companies, who have realized that cash flow is critical, have an in-house Accounts Receivable Department and taking into account their salaries, the industry standard cost of collection calls is between $32.00 to $46.00 per invoice.

At Liquid Capital Solutions Okanagan, our professional collection call service includes on-line, daily updated, reports that show: aging / days outstanding, balance statement, and most importantly, collection notes. Why are these customer comments so important? Most businesses lose 10 – 20 % of their customers each year, for many reasons, but one reason is that they have been disappointed in some way. Rather than tell you, they chose to take their business elsewhere. How valuable would it be to your business to have built in customer feedback that could reduce your attrition rate?

However, as much as collection calls are crucial, and can significantly reduce your days outstanding, wouldn’t it be nice to be paid immediately for your goods or services?

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