6 Tips to Collect Accounts Receivable
Techstars had a great session on direct selling today focused on building lists, email to get opens, replies and eventually a sale. We were keenly listening to the presenter (Manny from Outreach), as this is a focus area for us. I had a few big takeaways:
- Send 5-7 messages; most of us would think is high, but statistics show you get incremental bumps with that many touch points.
- Be a human and not a robot. No one likes to buy from a Robot.
While the sales learnings were interesting, I had an Aha! moment on how to better collect accounts receivable. For small business owners, overdue invoices are the bane of their existence as it hugely affects cash flow and the overall health of the company. But for some reason, we are reluctant to chase it down. Strange, because that is our money! Why does this happen? From what I’ve gathered in my conversations with small business owners,
- We are busy. We need to sell, fulfill, build, manage…..and more.
- It is icky. We feel awkward asking our clients to pay. That isn’t the basis of the relationship.
- Know-how. We aren’t sure how best to do it.
- It will solve itself. They will pay eventually. Decent people pay. Right?
Applying the learnings from direct sales can help improve small businesses collect accounts receivables. Here are some ideas that I took away:
- Initiate a replicable process – save time by sending a templated email but be human and don’t template to the point of coming across like a robot
- Send it from an email address other than your own (i.e. firstname.lastname@example.org). Your customer doesn’t need to know the email is actually coming from you.
- Send multiple reminders. Reply to your early reminders and up the ante on the message each time.
- Guilt them. Most religions are based on guilt because it works. Let them know that you are a business too.
- Talk to them. Email is great and efficient, but if it isn’t working then call. Use a script to guide your conversation. Keep it short and get their commitment to pay.
- Fire them. Really, wake up. Stop selling to people that don’t pay you. Do I need to show you the math?
If you aren’t reminding them, you have no-one to blame but yourself. If you are reminding them once, it probably isn’t enough. Remember. It isn’t you. It is them. Don’t take it personally.
Do you struggle with AR or customers that don’t pay? Let us know what has worked for you, or what hasn’t in the comments below.
This blog post was originally published to Mentio.ca in 2015.
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About the Author
Lendified is Canada's premier online lender for small businesses. The company was founded by former bank executives dedicated to provide businesses with fast, easy, and affordable financing. The Lendified team regularly produces blogs and guides to help small business owners succeed.