Negotiating Payments and Customer Visits for Credit Collections

Post from a forensic accounting company in Ireland.

One reason your customer may not be paying you is because they have a temporary hitch in their own cash flow, perhaps a large customer has gone under. In these situations it is ‘far better to negotiate a planned settlement of your account than to cut off their supplies – an action which could leave you in exactly the same position as they are. Rather than trying to reach agreement on the telephone, or by letter, it is often far better to do it face to face. Your credit manager should not restrict his visits to times of stress. Reconciling the larger customers’ accounts, or visiting them when they are first introduced, will help him to understand how they operate.

Major accounts

The largest amounts due to you in any one period are probably owed by a small percentage of key accounts. Financially orientated visits can therefore be beneficial to you both. However, never simply turn up on their doorstep unannounced: make an appointment, and be thoroughly prepared. This will mean:

  • taking copies of their aged sales ledger
  • having a list of outstanding disputes
  • knowing what you want to achieve from the meeting

If possible try to arrange your meeting for a time when it might be possible to collect a cheque. This should not be your sole reason for your visit, but if payment can be organised at the same time, why not take advantage of this opportunity?

The main objective of the visit should always be to foster better customer relationships and to increase sales whilst maintaining a balanced payment regime. Unfortunately some companies are still sales orientated, and their sales managers try to stop anyone other than sales reps calling on customers. This is a narrow-minded view, which must be discouraged in today’s environment.

Well planned visits

Taking the trouble to plan your visit beforehand should enable you to sort out any on-going problems, which could be upsetting relationships between your company and the customer. Analyse their financial position discreetly, and have a thorough discussion relating to:

  • credit perimeters
  • future payments
  • handling their disputes

On returning to your office, a letter, email or report highlighting every single point discussed, and agreement which were reached between you, needs to be sent to your customer immediately before memories have a chance to fade.

Arranging time to pay

Suppose a visit by your credit manager was purely to assist your customer over a short-term difficulty, and you agree to amortise the overdue account whilst continuing to supply them. Your letter confirming the arrangement to pay by instalments must comply with your own internal credit policy.

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