Chasing up late payments is probably one of the most difficult tasks for a credit management team – and it can be a problem whether you’re working for a big multinational organisation or an SME. Sometimes, just getting hold of a late-paying customer can seem impossible and even if you do manage to talk to someone, getting them to actually hand over the money can also be tricky.
You probably have a number of methods that you already try in order to avoid late payments and get your customers to pay. But, it’s always good to have a variety of tools at your disposal. After all, every customer is different, and what works for one might not work for another.
With that in mind, here are three methods that can help you clear that list of unpaid invoices:
- Positive reinforcement
Many companies opt for the opposite of positive reinforcement, penalising customers with additional charges for late payment. However, most experts actually believe that rewarding good behaviour is a much better solution. This means offering a discount to customers who pay early or on time.
Providing an incentive to pay early can really motivate customers to ensure they meet your payment terms. In fact, they might even feel happy about handing over the money before it’s due – who doesn’t love saving money? If you’re adamant about hanging on to your late fees as well, you can. Just make sure your terms are clear and try to promote the discount, rather than focusing on penalties.
- Make credit management everyone’s responsibility
We don’t mean shutting down the CM department and doling out all the responsibilities to the rest of the company. However, it’s important for everyone in your business to understand their role in ensuring payments come in on time.
For example, if you look into the reasons why customers aren’t paying on time, you may notice complaints about quality or late deliveries. In that case, it may be that your quality control and logistics teams need to up their games to reduce the opportunity for customers to raise valid complaints and refuse to pay.
- Use customer segmentation to personalise messages
No two customers are alike, so you need to customise your approach to deal with each one in the most appropriate way. Customer segmentation makes the most of the data you have to create a more tailored customer experience.
With customer segmentation, you can target specific, smaller groups with messages that are relevant to them. It can make customers feel like they’re getting more personal service, even though you’re still carrying out bulk actions.
Contact or more information?
OnGuard’s credit management software offers a variety of features, ranging from data management to advanced reporting, customised dashboards and the ability to carry out effective customer segmentation. If you’re looking for a solution to streamline your credit management processes and get more payments in on time get in touch today.
Or contact OnGuard via +31 (0)294 256666 or firstname.lastname@example.org. Follow @OnGuardHQ on Twitter or LinkedIn to stay up to date.