Receivable Best Practices Management, an on-going series by Florida Debt Collection Attorneys, Marcadis Singer, PA.
Today we discuss Payment Methods.
1. Try online Payments
Today, people are far more inclined to pay online. It is far easier, and far more immediate to simply go online and make a payment. Just finding an envelope and a check can be a chore for some people. The world of payments have changed, those that adapt, tend to be paid much sooner, and more regularly.
2. Investigate Installment Plans as payment methods
Receivables Management is not all about getting what is owed to you paid in a timely fashion, it is also about supporting your business growth. If you have the internal systems to support it, look at offering a payment plan, and watch how business grows. The old adage “America Buys On Time” could never be more true. Software tools that are relatively inexpensive makes offering installment plans far easier than it once was.
3. Individualize your Installment Plans as a payment method
One Size Fits All is not always the best way to approach installment plans. Balance your risk, against your customers credit worthiness and cash flow, and reach a middle ground where your installment plan is a win for everyone.
4. Use Finance Charges as Motivators
The Carrot and a Stick paradigm could not be more relevant than when offering credit to customers and clients. The carrot, obviously the extension of credit. The Stick, Finance Charges. Money costs money, and it is paramount to make the extension of credit “not free” to set expectations early in the process. Should the account ever go to court, it is also possible to collect on Finance Charges as well as the original amount of indebtedness.
5. Openly Communicate about Finance Charges
Finance Charges need to be clearly communicated so that they do not appear “punitive” and so that they are enforceable.
6. Have a “Grace Period” before Finance Charges Kick In
The idea is to encourage quick payment. If a debtor pays on time, they should be rewarded by not having to pay finance charges.
7. Leverage Finance Charges in Negotiations.
As the rest of the business negotiates “the deal” with your client, Finance charges can be a very effective negotiation tool. The Accounts Receivable Department, as mentioned often in this series, should be enabling more business, not merely collecting debt. Giving the business the flexibility to negotiate Finance Charges makes the Receivables Department a partner in growing the business.