Training Your Customers to Pay on Time
In this post, I’ll show you how to get your customers in the HABIT of paying on time.
The fact is, we’re creatures of habit. We do things the same way, time and time again—until we learn otherwise. There’s a reason we keep going to the same restaurant over and over, and a reason you buy coffee from the same place, at just about the same time every day (maybe that’s more addiction—which is really just a habit gone awry)!
So like it or not, we’ve all been trained in various ways—and for you to get the most out of your invoicing, and shorten your cash conversion cycle, you’re going to have to train your customers.
But, before we jump in, remember, the prerequisite to this training program is getting the invoice out on time! Shocking I know, but most companies miss the mark before they even get started because they don’t get their invoice out soon enough.
The Early Confirmation Call
First, a great practice is to check in before the invoice is due. This may sound a bit over-zealous, or like time wasted, but it turns out to be one of the easiest and most effective tools for cash flow improvement.
The most common reason an invoice doesn’t get paid is that it wasn’t received, wasn’t received by the right person, got stuck in a spam folder, or some other very solvable AR problem. By following up early, while the invoice is still current, you are giving yourself a chance to get the jump on any possible issue before it becomes an issue.
When Past Due, Pursue Early
When the invoice has just become past due, make sure your customer knows that you are on top of it—otherwise, what you’re training them to do, is not pay. By waiting a few weeks, or longer, you’re teaching them that it’s no big deal to be a late—this time, next time, or on every bill.
Bottom line: If you don’t follow up on time, you’re probably won’t get paid on time.
Consistency Creates Habits, Faster
For your new customer-training program to take hold there has to be a high degree of consistency—there has to be regularity of contact. Studies have shown that following-up at random is not nearly as effective as following up on a set schedule. For example, if your clients know they will be getting a call from you every other Tuesday afternoon, until the invoice is paid, they are going to get the message.
Multiple Channels Trump One Channel
The last piece of your customer-training program: follow up through various channels. During your client-setup process, ensure you have your customer’s phone number, mailing address, and email address—you’ll want to use all of them.
Contacting your customer through the same channel over and over can get annoying, or worse, turns your outreach into white noise. Using multiple channels will help you cut through the clutter.
One tactic that has been effective for many is to “cluster” your AR communications. In other words, send a printed reminder, then, a few days later email them a copy of their invoice, then a few days after that, give them a call.
In Closing
Training your customers will help you get paid faster, will remind your customers of your commitment to excellence, will keep your credit risk under control, and can even improve your customer relationships in the process.
– Interested in learning how ZenCash can help you put what you’ve learned here into practice? CLICK HERE.
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