Where have you been?

“So Geoff, what happened to that blog of yours… it’s been 15 months!”

Well, in order… “busy, difficult house move, busy, missing password, cancer”… 5 answers which cover the relevant 3mth blocks…

Does any of this ring bells? From the mundane to the profound, lots of smaller businesses often have more on their “to do” list than they can cope with… often with credit control falling down in the priorities – right until the bank account is empty… which means weeks or even months can go between action to collect on overdue invoices!

Since my last blog, money has become – if possible – even harder to claw in, so maybe it’s time to revise those priorities, before your bank balance forces you to!

Credit Control – that is to say, the art of securing both payment AND customer – requires a regular and consistent approach to really work… So while I make time to regularly update my blog in future, I’d suggest everyone who reads this to make the same commitment to ensuring time is spent each and every week to getting overdue invoices paid… no matter what other “priorities” are calling!

Talking telephone numbers!

I read an article recently that included a quote from a director of Barclays Business bank, which said that:

“We estimate that around £9 BILLION is owed to UK SME’s each day”

That is EVERY day…

To give you an idea…

The savings the latest budget is trying to make – that has everyone going through hoops! – is ONE WEEK of prompt payments to businesses…

How about this?

The money the banks should be lending but aren’t?  – TWO WEEKS of prompt payments…

Think it might be time to re-think your credit control strategy now? (Or worse, get one?)

For the businesses that can – pay on time… help the others catch up…

We have no-one to rely on but each other… keep the money moving!

It’s taking longer…

I read with interest an article in the May edition of Credit Management – the journal of the Institute of Credit Management.

It said that new research conducted for Bibby Financial Services showed that “35% of businesses are finding customers are taking longer to pay than 12 months ago… with 47% of manufacturing and construction firms saying that customers are taking longer to pay…compared to 36% of firms in business services”.

In short then, a third of businesses are finding it takes longer to get paid than a year ago… a call for action if ever I heard one!

I’d urge all business owners/managers therefore to take action to protect your most valuable resource – your sales ledger! Please ensure you are doing the following – as a minimum…

DO:

1. Get the invoice right – and out the door! Invoicing your customers late, or with errors, will delay payment.

2. Make sure your systems for dealing with queries works as fast as possible – quicker query resolution means quicker payments (and happier customers).

3. Pick up the phone! Don’t wait a month (never mind longer!) after payment was due to call for the payment – the sooner you call, the sooner (in general) the payment will arrive. (Try looking at my earlier blog to see how to improve the effectiveness of your collections calls).

4. Get help if you need it – if payments are taking longer, and you can’t resolve it in-house – or you are unsure of the best way to resolve the problem – call someone in… consultants can achieve much, but the sooner they are involved the better…

DON’T:

1. Ignore the situation!

2. Do nothing!

Even if you only make one call (to a consultant) – make the call… there are people out there who CAN help, and they can help you maintain your cash flow through what is bound to be a difficult time for businesses!

How Does “paying out” Help?

Something I’d like to see more companies use is the Prompt Payment Code.

If you’re a good – as in paying – firm, then why not shout about it!

Also – if this gives you an edge… would you want to ignore the benefits it can bring? Companies are itching to know who is safe to deal with, and who isn’t…

You advertise your good “goods” or “services”, why not your good “payment record”?

2 – 4 – 6…who “8” that cheque?

Couple of things recently which made me think it worth blogging about, when it comes to cheques…

First – if your bank balances don’t add up – have you looked at the value of cheques paid in over the last 6 working days? They don’t count towards your available balance…

Second – from above, cheques don’t clear for SIX working days from the date banked – please bear this in mind when it comes to cashflow projections, planning payments, and the like…

Client got caught out like this recently… cheque was banked before Easter (26th March), cheque did not clear until 7th APRIL…

BE aware of timeframes people!

Is your Cashflow causing sleepless nights?

Blimey – has it REALLY been that long since my last blog?!? I must keep a closer eye on the calendar!

There are a lot of people out there thinking that outsourcing is too expensive, so I thought I’d share this example of a new client of mine, to put it in perspective…

My newest client, who set up a garage last year, was doing OK, he’d had some good and some bad months in his first year, but the work has really started to come in over the last couple of months, helped that he’s starting to get the first set of repeat business from last year’s MOT’s and services (in addition to the extra routes to market he has opened up).

“All good news” I hear you say, well almost…

While the guy is – frankly – a genius at repairing cars (He’s kept me on the road for the last year – high praise indeed if you knew my car!), he is not the most organised when it comes to his office…

He was losing time, getting distracted all the time by what was piling up in the office, and didn’t really know what his cashflow was then – or would be next week.

Anyway, long story short, I now go in for one morning a week, sort his paperwork, and when I leave each week he knows EXACTLY what he’s got to spend for the next week (plus of course the books are up to date, and all the other business/strategy advice that comes as part of the deal).

He told me yesterday, he’s not been so relaxed since he started up…he can concentrate on doing the work he gets paid for (he has a full day for billable work he didn’t have before), doesn’t worry like he was doing, and actually gets to sleep easier now…

For all these benefits, he just has to work two of those free eight hours to cover the cost… Two hours work for peace of mind… cheaper than going to the chemist isn’t it?!?

There are a number of professional, experienced outsourcing companies out there – Urecall Ltd being just one of them – and I’d urge you to look at the benefits to be gained from letting outside professionals strengthen your businesses weaknesses, so you can concentrate on it’s strengths, and sell/do more!

Supporting Customers in the Recession

Firstly, my thanks to those kind people who were most gracious about my first blog effort. I hope it has – or does – provide some help…

I also hope the next offering also provides some help, or just food for thought…or maybe further discussion!

One of my other projects reminded me of the following case study, which I’ll examine in more detail – here’s the case study…

“Supporting Customers in the Recession

One of my clients sent a big order for Christmas 2008, which took the credit limit with the customer to the limit. Now, this customer was supplying to pubs, and we know how they’ve been hurt in the recession…no surprises then when the customer couldn’t get paid by those pubs in January 2009. My client was left with two options at that point: 1) insist on terms, meaning their customer goes out of business; 2) go for an alternative…

As I suggested, my client agreed a payment plan for the customer, continue to supply, but on proforma terms, with a bit off the older invoices each time…months down the line, the plan continues to work, the balance on the older invoices continues to reduce, and the customer continues to trade.

So what has the client got from it? Months of trade – and so profit – they would not have had otherwise and…invaluable customer service and loyalty…what would that be worth in today’s climate?”

I wonder how many people who read that will ask this question first “Why did you continue to trade?” Well, there was a combination of factors at work here…

1. The customer had been trading with my client for a lot of years.
2. The customer had been through some ups and downs, but had developed a good reputation with my client. (Sometimes the payments were going to be late, but when it happened, the customer called and warned my client, and pre-warned, they could be more flexible).
3. It was – to the client – not a critical amount.
4. Based on the customer’s afore-said good reputation, I was more confident that they would honour the agreement.

Let’s look at it from a cash – money – point of view. To make it easy, let’s say the account was worth the following:

Value of orders – £5k per month – constant value

Profit margin – 10%

Current unpaid – £5k

So – in cash terms – the choices were:

option 1 – write off the £5k, which comes straight off the bottom line – as bad debts are deducted from the net profit margin.

option 2 – accept repayment of the £5k balance over the course of a year, and continue to supply and get sales for the year as well. (again for simplicity, let’s say sales volumes stay constant through the period)

So – by going with option 2 – you go from a net loss of £5k, to a net profit of £10k.

Next let’s consider cashflow…by agreeing the payment plan, the client began to receive money in from a source not expected when the situation arose…the customer was paying in, rather than saving up to pay the invoice in full…when it comes to cashflow “something is better than nothing”!

Lastly the customer loyalty – which is an immeasurable value – think what your customer’s loyalty is worth to you…then try to put an honest value on it…

Disclaimer! Just to be clear about this – I’m not for a moment suggesting everyone just start accepting part payments, or not asking for the full amount they are owed! There are two points I’d like you to think about from this though…

First, to be truly effective, every system needs to be flexible – including credit control…

Second, bring that same flexibility to your own decision making…consider the options /alternatives…

Telephone Calls in Credit Control

Someone this week very kindly dragged me kicking and screaming into the century of the fruitbat! (As Mr T Pratchett would say!) “Blogging” huh? Fair enough, I’ll give it a go!

I was recently asked to develop a ‘telephone call script’ for a client, so they could get a member of their own staff to start making Credit Control calls. The member of staff didn’t know what to say, and otherwise generally didn’t feel comfortable ‘asking people for money’…so the plan was that the script would overcome these difficulties!

Now, I’m not a big fan of ‘scripts’! I hear them too often from people who call me, and clearly don’t have a clue if the call goes ‘off script’! Ad-libbing is not on the agenda!

Saying that – that’s what the client wants, that’s what the client gets! So I sat down, and started to develop the script, making me consciously go over what’s needed to make a Credit Control phone call effective (and this brought in other discussions on the same topic from the last few weeks)…

I thought I’d share the fruits of my labours with you…

A properly conducted telephone call is the most effective tool in Credit Control – why? Because:

• It allows you to engage with your customer, allowing you to maintain and “re-affirm” the relationship with your customer on a personal, human level…no machines here!
• It brings crucial information into your business – when money will be coming into the business/ why money won’t be!

1. Are You Sitting Comfortably…?

The person making the call needs to feel comfortable and confident in what they are doing. Make it natural…don’t use phrases or words that you wouldn’t normally use. Don’t slouch…it helps – really!

2. Preparation – Why we are here…

• The obvious bits first…allow time for the call, if you need to be somewhere else in two minutes’ time (even if it’s only the loo!); don’t call! Rushing through a phone call will be noticed by your customer, and will make them feel marginalised +/or secondary – not good!
• Before you pick up the phone – know who you are calling and why, if you have customer accounts software, spend a few seconds familiarising yourself with the account, the invoices you are going to speak to the customer about, and any previous call history (if you have that sort of information). Check the records to see if you have the name of the person you want to talk to, so you can ask for them directly. At very least have a copy of the invoice/s you are calling about to hand!
• Approach and Aim– the first call in the sequence should be based on the premise that you are expecting payment (if there’s something wrong with the invoice you shouldn’t be calling!). So your aim is to confirm when payment will be made.
• Focus! Remember to stay focused on the result you want to achieve, don’t get sidetracked, or allow yourself to be diverted from…keep your goal in mind…

3. Take a Deep Breath!

Allow yourself a second to relax…to be effective, someone making a Credit Control call needs to be friendly, yet professional at all times. It is NEVER personal! It’s a business call…remember to treat it as such! Then dial the number, and smile… (Friendly, remember?) It may sound daft, but having a smile on your face does affect how you sound!

4. Details, Details…

Keep a record of the date and time you make the call, the name of the person you spoke to (confirm you spelt their name correctly if need be), and what the outcome was. If the customer says they’ll send you a cheque, be sure you know when, get a day/date “later this month” is too vague, but “on the 15^th” or “this Friday” you can work with!

On the other hand, if they tell you they’re not paying because there’s a query or problem, ask for all the details (the five “W’s” – Who/What/Where/When/Why). Find out what the problem is…the more information you can get the quicker and easier it is to resolve.

If you’re calling for your own small business, my advice is don’t ever answer a query there and then! You could say you need to go and check the original paperwork, or previous emails…find a reason that allows you to go away and think about it! Knee-jerk reactions rarely give the right answer, and you could more damage to the relationship with that customer than if you were to think about it for a while…

5. The Follow Up

You remember those annoying details you had to get before? Well, here’s where they pay off! Let’s go with the “cheque in the post this Friday” option…put a note in your diary (Outlook works well for this, or you could buy one, or just put a sticky/note somewhere where you’ll see it!) for the following Friday, so that you make sure the cheque actually did come in…If it didn’t, that cues the 2^nd call to the person you spoke to before…”hello ***, we’ve not had that cheque you said you were sending, what happened?”

If the customer says “I haven’t spoken to you/don’t know what you’re talking about”, you can give them the details – date, time etc – from the previous calls, to refute that claim (a bit of personal additional info you might have got at the time also helps to ‘jog their memory’!) I like these ones, as most of the time you can almost hear the person on the other end cringing more and more, as you lay out chapter and verse from the last call!

More often, the response is “I know, sorry, director was not in Friday, but they were here on Monday, so we couldn’t send them until Tuesday” – you then allow a couple more days before following up again! The key is to keep following it up – the customer soon learns that you won’t be ignored or “fobbed off”!

To reprise the high points – remember…

Prepare…       Deep Breath…           Detail…          Follow Up!

Ps – What happened with my script? We never used it! I sat with the member of staff, went through what I’ve talked about here…added some motivational / confidence building talks, and off they went! No script, but end result achieved nonetheless – staff member making Credit Control calls –

Job done!

I hope the above is helpful, if you wish to look at improving your own, or your teams’, telephone call techniques in more detail – or with specifically tailored training, there are a number of companies and organisations that offer training in this area.

UKBF Member Advice

I shall be writing some articles over the next few weeks but in the meantime, check out my posts on UK Business Forums

http://www.ukbusinessforums.co.uk

Regards

Geoff

Welcome to Urecall’s Blog

To be short, we’re here to help you get paid on time. That’s it…no frills…no long flowery speeches…you get paid – job done – sale complete.

Whether we do it for you, or show you how to do it for yourself, helping you get paid when you should be is what we do.