Collection strategies on past due accounts?

The question: How can I get my office manager to do collections calls?

Steve’s answer: Can you change your procedures to avoid past-due bills in the first place?

Good morning Steve,

I am working  on implementing the systems you shared in our SFS: Hands-On Operations training. But I’m struggling with what type of bonus system and/or disciplinary action should I do with my office manager. (I’ll call her Sally.) Sally is responsible for collecting on our receivables and consistently drops the ball. She does not like conflict so she does a poor job of keeping our receivables up to date.  Any suggestion or advice you can give would be appreciated. Thanks!

Stumped in Seattle

Dear Stumped,

collections strategiesI’m assuming you are pleased with your office manager’s reliability and work ethic in all other areas? If not, you know what to do! But I’m assuming Sally is a stellar employee EXCEPT for the receivables. Correct?

So therefore the key sentence in your email is: “She doesn’t like conflict so she does a poor job of keeping our receivables up to date.” (The glib answer is, “Who of us does enjoy ‘conflict’?”) All of us tend to avoid/put off and/or ignore what we dislike/HATE. (Me too!)

So what can you do with this otherwise exemplary employee? Simple. As much as possible, remove the “conflict”! Ah, but how? Consider these options:

1. Especially on residential can you tighten up on terms? We recognized on commercial (and especially on national accounts) the need to bill them was a necessary evil. But on residential it should be clear to the homeowner before your techs arrive that your terms are ‘payment upon completion’.

NOTE: Maybe add a closing statement (after booking the job) to your Phone Format like: “So can I make a note for your technician on how will you be paying for these services?” If the homeowner states they won’t be there (and especially with a first time customer) reply: “Company policy is we get a credit card number upfront so we don’t have to bother you with sending in a check. Will that be VISA or MasterCard…?” This proactive response BEFORE the job should remove a lot of the confrontation for your office manager. (It will also save a lot of Sally’s time!)

2. Play ‘bad cop- good cop’. Very likely your office manager is worried that the deadbeats she is calling will go ballistic on her. No normal person enjoys that. One tactic is to state (especially on repeated calls) “Hi Mrs. Jones, this is Sally with Jon-Don Cleaning calling. I don’t like doing this but my boss says I have to get my assigned past due bills in this week or I’m in big trouble. Can you help me out here…?” After all, Stumped, you ARE a tough boss! Right?

3. Change her attitude. Nobody likes having to bug people to pay their debts. But when you think about it… WHO should be ashamed? The deadbeat losers who have refused to pay a very justified bill! This is your company’s money and frankly will go toward paying Sally’s salary!

4. Try getting slow-pay commercial accounts on auto-pay out of their checking account. (Or even their credit card.) You’ll likely need to make a personal visit and say, “Charlie, these repeated receivables calls are stressful for you folks and for my dear office manager. Could we just set up your regular services on an ACH debit out of your business checking account? Or look, we can even put it on a credit card.”

5. Be a Mr. Good-Finder. Look for opportunities to praise Sally’s efforts when they produce fruit. You may even want to give her a small bonus when she pries loose a big payment from a miserly customer but I’m not sure I’d make that a routine practice. After all, this IS part of her job!

6. ‘Delegating’ this probably won’t work. You’ve told me already that your office manager is not all that busy. But if you can justify this extra expense I’d say collections would be perfect for a part time employee (or possibly contract labor) working out of their home.

By the way, Stumped, CLICK HERE for more collection strategies!

See if any of these ideas resonate with you, Stumped, and let me know what works and/or how you dealt with this. After all, I’ve been there too!

Steve

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