This is a series of Q & A interviews with Nicki Kinton of NK Credit Consultancy in which PPD is looking at the typical excuses that suppliers often hear when chasing late payments, and asking Nicki how best to handle them.
Excuse #2: Accounts clerk only comes in once a week
How often do you hear this excuse when managing credit control on behalf of your clients?
This is another common response particularly from smaller businesses.
When you think about it, a small business owner can’t do everything, and if they are trying to you’re probably encountering Excuse #1. But the business may not be big enough to have a full-time member of staff in every role so it is inevitable that you will encounter this situation if you are trading with smaller businesses.
Is it a legitimate excuse?
It’s a fact.
That’s not to say that there shouldn’t be some provision in the business for making urgent payments on the days the accounts clerk doesn’t work. Of course, you need to convince the business that you can’t, or shouldn’t have to, wait the 1-4 working days for the accounts clerk to next be in the office to get paid.
What would it cost your business if you waited those few days and what would it cost the relationship if you insisted on someone else making that payment there and then? The answers may depend on how overdue the invoice is and how many times you’ve already tried to obtain payment!
In your capacity as a credit management consultant who might also be on the customer’s side of the fence, what advice would you give suppliers to make sure they don’t keep missing the boat every week?
Find out which day of the week is the accounts clerk’s working day and plan your call for that day. Make sure you know the hours worked as well as the day of the week and get direct contact details.
When you know you have invoices falling due on their non-working days call them before they fall due to make sure everything is in hand.
What should a supplier do if they can’t get through to a busy accounts clerk that only comes in once a week?
Firstly, support your calls with an email, sent the afternoon of the day before their working day so it’s fairly near the top of their Inbox when they get in.
If you consistently can’t get through, despite having a direct dial phone number then escalate to the buyer, the business owner or the relevant department head and explain your inability to make contact. Outline what you need to happen, and arrange how to follow up in the most appropriate way.
As with all collections calls it’s important to keep your frustration out of it, stick to the facts and you are more likely to get the result you want. Show your frustration and you are likely to be met with defensive aggression.
Part time / consultant accounts clerks are hired for their expertise and time saving benefits, what if the customer keeps referring the supplier back to the accounts clerk?
This is a performance issue for them to manage and it’s ok to remind them of that (politely!).
Make it clear that you are only asking for them to work to the terms you both agreed to prior to any supply of goods or services. Remind them of their responsibilities according to the terms and ask them to advise why the accounts clerk is unable to meet those responsibilities. Often the customer has failed to communicate terms to the person responsible for making the payment!
You should also remind the customer of any provisions in the terms around late payment, such as the charging of interest and that their intervention will keep any additional costs to them in check.
As before, persistence is the key, regular, non-confrontational communication builds familiarity and rapport.
NK Credit Consultancy Ltd offers a complete credit management solution for your business covering all the core competencies including due diligence / designing credit policies / designing terms of business / improving the accounts receivable process / ensuring compliance with consumer credit regulation and Credit Insurance Policy / establishing reasonable credit limits and payment terms and more. To contact Nicki click here.