Annie Kile

Many small business owners will fess up to the fact that they didn’t realize part of owning a small business meant they needed to learn how to sell – not to mention overcoming their own personal prejudices about “Sales” in order to do so.

But there’s something a lot of small business owners are even more uncomfortable about: Collections.

It doesn’t matter how much you sell if people don’t pay up. If you find yourself sitting on a ton of unpaid invoices, you need to get busy overcoming any hesitancy you have when it comes to getting customers to pull out the plastic or write you a check.

Similar to getting over any stereotypical “Smarmy Sales Guy” perceptions in order to ramp up on professional sales processes and management, many small business owners need to re-orient themselves to the idea that managing and collecting on accounts receivable is simply a professional small business best practice. However, instead of “Smarmy Sales Guy” many of us have pictures of “Mean Scary Collection Guy” dancing in our heads when it comes to collections. However, just as you came to understand there’s nothing “smarmy” about professional sales, there isn’t anything “mean” about professional collections.

Prevention is Worth a Pound of Cure
The best way to avoid having trouble collecting on invoices is making sure your customer understands the terms they’ve agreed to at the point of purchase. Some of you out there might even have trouble with that. “Asking for the money” is often the most difficult part of the sales process (and that difficulty leads to untold numbers of lost sales.)

However, once your customer has agreed to purchase goods or services from your small business, the first order of the day is to immediately review the terms of their purchase with them – as well as the consequences of not meeting those terms (i.e. late fees, surcharges.) Don’t let them walk out the door unless and until you are completely certain the terms have been understood and agreed to by your customer.

And, while you’re going over those terms, watch out for some common telltale signs that you could be looking at a customer who may have issues when their bill comes due. If your customer seems to be hedging, is having trouble making eye contact with you, gets a little “huffy”, wants to rush through the process, even if their tone of voice changes (for instance they go from exuberantly excited about their purchase to timid and withdrawn) - trust your gut if you’re at all uncomfortable with either their ability or willingness to pay. If you are uncomfortable, don’t hesitate to up front ask if your customer has any issues with the terms or foresees any difficulty meeting them.

The Dreaded Collection Call
It’s likely that your dreading making that collection call to a customer as much or more as your customer dreads receiving it. But, if you’ve made other attempts to collect such as a letter or email with no results – it is definitely time to pick up the phone.
First off, you’ll be much more comfortable making that call by changing your perspective from “demanding payment” to “assisting the customer to make their payment.” From this perspective, a collection call is a form of good customer service. And, there are a few things you need to do to make sure you are indeed providing good customer service when making a collection call:

Remain Calm.
During your call maintain a friendly yet professional demeanor and be prepared NOT to lose your temper or make anything even remotely resembling a “threat.”

Create a collection call “script.”
Your script should always include first greeting the customer by name. If possible, start the conversation off with a few comments you remember about them such as, “I really enjoyed working with you to find the best solution for your company” or “Last time we talked you were going on vacation, hope you had a great time.” Remember, positive relationships have a greater chance to deliver positive results.

Prepare yourself ahead of time for responses you may get from your late payer. While you might not know exactly how they will respond, people generally are experiencing a financial setback, some sort of personal crisis, or they may have even simply forgotten or just “not gotten around to it.” Come up with ways you intend to respond to pre-anticipated responses.

Make sure you’re talking to the right person, the right person being the person who is going to write the check or give you their credit card information. If you’re told that person isn’t available, make an appointment to speak with them when they will be available.

Once you’ve greeted your customer, let them know why you are calling. This can be a simple statement that their payment is late, you’re wondering what may have caused that to happen, and you want to assist them in making a payment.

Once you’ve discovered why a payment is late, your next step is get paid. This may be in full, or in part. It is much easier to collect a payment when you can do it over the phone during the call by being able to accept a credit or debit card payment over the phone. Even a partial payment is better than a “promised” payment.
Decide whether or not you will change terms before making your call and have those terms written down in your script. You may even want to have two or more “offers” prepared as this gives you a greater chance of being able to come up with payment terms your customer can meet.

Follow up. Once a customer has agreed to make a payment, follow up with an email or letter that describes those terms and ask your customer to confirm they have received your letter or email message and invite them to ask any questions they may have regarding those terms. Be sure to thank them for their business.
Send a gentle reminder. It is also useful to send a reminder a week or so before the payment is due. Again, be polite and professional. Let them know that you were happy to be able to make payment arrangements and appreciate their business.