You called John Smith this morning for the 18th time and left another message.  You found out that John recently bought a new truck and is renovating his home.  When you left another message this morning, you were told John is away on vacation.  You haven't collected any money from John in months and your boss is chewing you out.

Since your phone calls are obviously not working, you decide to write John a letter.

Take these 4 steps:

1.  Make your letter brief and to the point, being blunt is best.

2.  Use a larger font in the important parts of your letter.

3.  Give them a payment deadline day, date and time, tell them what will happen on that date if no payment is received.

4.  Send this letter in a flat rate priority mail invelope with delivery confirmation.

I know what your thinking, priority mail envelope? How much is that going to cost?! You pick up the envelope for free at the post office or order them at their website, the postage is less than a gallon of gas, and isn't that worth receiving much more in return?

5.  Bonus item! Email me if you do not get paid.  I mean it.

I have been consulting with companies for years advising them to do this and they all have had FANTASTIC results. So if you do not have great results please email me because so far this always works like a charm.

What do you call customer's that don't pay their bills?

1. Cash flow is King, be active in pursuing your accounts recievable

2. Marketing budget. Most companies cut back on marketing spending during a recession, don't make this mistake.

3. Sales strategy. Focus on existing customers and clients.

4. Pricing strategy.  Now is the time to liquidate old inventory.

5. Customer feedback. Focus on customer service and find out what your customers need and want and provide it.

6. Keep an eye on the competition. Know what is going on with the competition, learn from them and be prepared to respond to what they do during the recession.

They interviewed me for a story on this topic a couple of weeks ago and that article was so popular they have now done a follow up with more detailed information to help business owners collect their money in a bad economy.

Credit policies are a must for every business that extends credit.  Every business that doesn’t accept payment at the time of the sale must have a credit policy in place or they run the risk of losing money and sales with the end result being that they are working for free.  If this gets out of control, you can end up with many customers owing you money but no money coming in, causing your business to fail.  Some steps you can take to make your credit policy easy, quick and painless are: 

1. Make it easy for the customer to get credit with you.  Have packets paper clipped together at the front desk; include the credit application, automatic payment permission forms and anything else you want filled out before opening an account.
2. Make it quick, by having these packets ready and waiting for anyone who comes in.  Have pens and clip boards available so they can be filled out immediately.
3. Make it painless, by either having them wait and running the credit application while they are still there or responding to them within a certain time period, say 24 hours.

Customers today, like everyone else are expecting convenience and speed, If you make opening up a credit account difficult or unorganized, you could lose the customer. 

When a potential customer fills out a credit application you can get near-perfect information about that customer and how they pay their bills and if they can afford more credit. Most consumers that take the time to fill out a credit application are serious about buying from you; otherwise they would go down the road to where they can purchase without filling out anything.

Extensive research shows that consumers that can obtain credit will pay more for a product or service when they are extended credit.  The result?  More sales, income and happy customers for your business.  This can result in more credit approved customers through word of mouth advertising, the best form or advertising there is.

"Dear Credit card user,

You owe us money.  We can raise your interest rate just because we feel like it. We can do this even if you have always paid us on time and your credit is still good.

We gave you a 0% interest rate to entice you to transfer a balance to us.  Now that you have, we can raise your rate from 0 to our standard rate or even higher, to our default rate, if you pay us late or go over your credit limit just one time.

You may have to get your payment to us 20 days from when we mail you the bill.  Mail delays in either direction are your problem.  If your payment is late even once, we can boost your interest rate to as high as 29.99%.

And you out there on the West Coast:  Your electronic payment is late if you set it up after 2 p.m. Pacific time on the date that it is due.

Sincerely,

Your bank"

Special. 

The press release states that this company is replacing traditional paper dunning notices and reminders with electronic versions.

I don't know how this works in regards to the laws about dunning notices and the outside of the envelope and sharing information but they offer dunning services using public computers, mobile devices and they say this is for when the debtor does not have access to their postal mail.

Thoughts? 

But what do you need to know in order to be a credit manager? 

Nancy Creamer has 5 great qualities that will help a credit manager be successful.

1. An economic background.
2. Creativity.
3. Flexibility.
4. A strong sense of the customer.
5. A good credit policy.

Many are asking some really good questions.