Let’s face it: No one likes making collection calls. So it makes sense to try to get the most out of each call.
Making collection calls is a skill you can develop. You have to be able to anticipate what the customer is going to say and be ready for anything, and you must remain in control of the call. For your collection call to be a success, it must always result in agreement as to what is to be done.
Related: Smart Payment Policies
From a business owner’s standpoint, a collection call is “just one more thing” they have to do on a long list of things to do. Here are a few tips that will help you get your collection calls done quickly and efficiently.
- Schedule a regular time or day each week to make collection calls
- Have all account information on hand
- Leave messages, but do not reveal that the call is about an unpaid bill
- Get the debtor to acknowledge the debt by asking if there was a question about the charge
- Offer to take a credit card over the phone for payment
- Ask when they will pay — and wait for an answer
- Let them know you are documenting whatever commitment they make about a payment on their account.
You must ask questions that require specific answers when you are making collection calls. Speak with precision and make the transition from questions to a payment arrangement. Each question should be clear and to the point, with silence after each. An example:
Debtor: I can’t pay; I don’t have any money.
Collector: Are you working?
Debtor: Yes, but I just started a job and don’t get paid for two weeks.
Collector: What day will you get paid?
Collector: On Saturday, you can mail me a proof of payment for R250.
This scenario can go in several directions, depending on how the debtor responds. You have to be positive, confident and compel the debtor to agree to make a payment. Once you have come to an agreement, send a confirmation letter with a payment envelope. Then call on Friday to remind them to mail the payment the next day.
Keep in mind that the people from whom you are trying to get money will use a lot of excuses to avoid paying. I have had debtors tell me they did not receive the confirmation letter with the payment envelope and don’t have any envelopes themselves, so they can’t make the payment.
You have to be ready for anything; you will never stop hearing new and different excuses. I told this particular customer that I could send her another payment envelope but I needed a new address so I could make sure she would receive it, and she could make two payments when she received it. The other option was taking a payment over the phone or Western Union that day.
Related: Payment By Pebble
It is essential to convey confidence when speaking to customers about a past-due bill or discrepancy. Does your body or phone language say you’re trustworthy, confident, and competent – or just the opposite? Here are four tips for a confident phone voice that will help you to collect more money:
- Your Greeting: People often make a judgment about you in the first two seconds of an interaction. It’s not what you say in that short time that matters most, but often how you present yourself. A dull, monotone will leave your listener with little confidence in you or your message. Smile when you speak on the phone; it will be noticeable in your voice.
- Your Voice: Sit up straight in your chair and picture the customer across the desk from you. Pay attention to how different your body language is. Do not slump in your chair, and notice how people react to you differently.
- Eye Contact: Since there is no eye contact when you’re on the phone, try to remain focused on the call and not on anything else going on around you. Think about how it feels when you are talking to someone who keeps looking around behind you to see what else is going on. Focus on your caller and be aware and alert.
- Confidence: Former California Governor Arnold Schwarzenegger is an example of someone who has an air of confidence about him. You won’t see him wringing his hands, or rubbing them repeatedly through his hair, shuffling from foot to foot or jiggling the change in his pocket. He comes across as someone who won’t cower or retreat, just as a bill collector should act.
Be ready for some emotional reactions when you make calls to past-due customers. They might be angry, embarrassed, sad, or frustrated. They might cry, swear, and yell. But keep in mind that the purpose of your call is to get the bill paid.
You can listen, let them know that you understand, and – based on their situation – offer a solution such as a payment plan or another option that will benefit both of you.
This article was originally posted here on Entrepreneur.com.
6 Hacks For Getting Clients To Pay You Faster
Almost everybody pays eventually but almost nobody pays sooner than they have to. That’s a problem.
Getting your clients to pay you on time is a real hassle. After a sale, it is easy to think you did your job and just relax. Nothing is set in stone until the payment is final.
Not getting your payment on time can be detrimental to your company. This is especially so if you need or were expecting that money to come within a certain timeframe. It is frustrating, and there is a fine line because often you are working with people who could be recurring, valuable customers.
Therefore, it is critical to you find ways to get paid on time. Here are seven hacks to avoid the hassle and get paid faster:
1. Set payment expectations early and give gentle reminders
From the onset, ensure that your clients know what their cost and payment schedule look like. You do not want to give them any reason for confusion or an excuse not to pay on time. Make it crystal clear when they need to pay by and how much they will need to pay. It will properly set their expectations to avoid surprises.
Offering gentle reminders about an upcoming payment can continue to keep their expectations in check. They might not be prepared to pay if they signed their contract three months ago and forgot that their payment date was tomorrow. Instead, put the pieces in place to ensure, with total certainty, that they know how much they will owe and when they will owe it.
Poor communication also sets a poor standard with your clients. It will give them the message that they can receive your services without having to pay on time. It is hard to change this precedent. Therefore, being consistent and straightforward from the very beginning will help you keep these payments coming.
2. Follow up
Do not hesitate to follow up after sending the invoice. Your clients are busy. They likely overlooked a payment if they did not make it. You can send friendly reminders to pay after a few days have gone by. No one minds a gentle follow-up as it demonstrates your ability to act professionally. I built my calendar app for this very reason. Follow up frequently till they pay.
Streamline the payment process as much as possible. There are some awesome tools to help collect payments today. The less time it takes your customers to make the payment, the faster you will get paid and the less hassle you will deal with. It is worth the upfront investment to set up the right systems in order to get faster results.
When possible, take the payment upfront, too. This way there will not even be an issue of getting them to pay. Today, people are more comfortable paying for a service before they see its full value in. Take advantage of that.
3. Offer small incentives for quick payment
Offering incentives for quick payments will speed up the process and build customer loyalty. Customers know they are going to have to pay at some point. If they know that making the payment immediately will give them an additional benefit, then they will often do so.
You can even form these incentives around your product or services. It could be sending company stickers, access to an additional feature, or a free week of service. This will reward them for paying on time and give them further reason to continue coming back.
4. Send the invoice to the right person
At larger companies, it is crucial that you send the invoice to the right person. When your clients are originally agreeing to pay, make sure they know how that payment will take place. It takes two minutes to discuss who will be making the payment, and it will save you significant stress on the back end.
5. Establish personal connections with clients
You might not always have the bandwidth to do this, but getting to know your clients will give you a much easier route to payment collection. In the case that someone has not paid, you will feel more comfortable asking them. It is easier to send a quick reminder to someone that you know than it is when you feel like you have to be more formal. Personal connections with your clients will ensure you get your money faster.
6. Think about the little things
There are a variety of small factors that add up to improve the speed in which you receive payments. Think about the time of day that you are sending the invoices out, the styling of the invoices and the actual content within them.
You can streamline the process with a clean and concise invoice. Make it visually appealing and include descriptions of what they are paying for. The process will slow down if you make mistakes. Instead, take the extra time to make sure that everything looks as it should.
This article was originally posted here on Entrepreneur.com.
Why Bartering Can Be Your Untapped Revenue Source
More organisations are experimenting with cash-free solutions. Here’s how bartering may drive the future of B2B commerce.
Many small- to medium-size business owners have begun to barter, trade and swap goods and services without any cash involved.
Take the city of Portland for example. Unsurprisingly, the culturally tight-knit and self-proclaimed weird city has given rise to a thriving underground bartering network. A recent Rolling Stone article showcased the colorful personalities and supportive business community that is Portland’s bartering economy. Some of them call themselves “swappers,” others simply identify as community-oriented business owners. All of them share a common bond of exchanging goods and services to help each other grow.
The trouble with traditional bartering like this is that it’s incredibly difficult to scale. The idea of a coffee shop exchanging beans for fresh food from a local grower is nice, but any business looking to expand can’t possibly expect that kind of barter to lead to scalable growth.
That’s what gave Bob Bagga, CEO and founder of BizX, the idea to create a community that enables businesses to turn their excess capacity into potential capital. Bagga explains:
“By using the BizX dollar, businesses are able to turn extra business capacity and assets into cash flow, which can, in turn, be spent at member businesses without any cash involved. The goal for us is to reduce waste, maximise member potential and help companies earn new customers.”
By creating a complementary currency to power commerce through the sharing of excess goods and services, Bagga and his team have given business owners a chance to create cash-free lines of capital for little more than their incremental cost of goods sold.
Most business owners have plenty of great ideas to grow, but lack the capital and cash resources needed for those growth initiatives. Take a restauranteur, for example. Expanding or upgrading the restaurant may be their desired path for generating increased revenue, but the cash required for such an undertaking might not be readily available.
What if that same restaurateur was able to exchange empty seats and excess food for a shared currency that they could then spend at other businesses in the network? While trading one meal with a contractor might not result in enough capital to exchange in return for a major overhaul, many units over time will eventually add up.
That’s precisely why business owners are looking for alternatives to traditional financing and venture capital raising. Those models, though effective, often edge out small- to medium-size businesses in favour of rapid growth SaaS companies or user-heavy business models.
As a result, businesses looking at growing should explore growth opportunities that require little to no upfront investment.
The future of B2B commerce
B2B companies often operate at less than their full potential. Bagga pointed out that small businesses in the United States, on average, only run at 80 percent capacity. In many cases, this is simply because connecting with new customers presents a real challenge.
Also, most B2B companies have excess business potential because they offer products or services that could field more customers at a small marginal cost of goods sold. As such, many can afford to accept an alternative form of payment, as long as they can use it for other practical applications.
While traditional bartering usually doesn’t result in additional cash flow, companies that are able to exchange services based on a shared or complementary currency can determine when and how to spend their newfound capital. Many will use that for marketing, advertising and public relations services that would otherwise have been too costly.
Cash flow isn’t always confined to exchanged services either. In many cases, these unique partnerships result in cash business resulting from direct referrals from services rendered in exchange for other goods.
This article was originally posted here on Entrepreneur.com.
The Steps Involved In Joining An Investment Holding Company For High Growth
There are many growth capital avenues available for established entrepreneurs. One of those is joining an investment holding company. Is this the right move for your business?
Let’s say you’re a high-growth, high-impact business that’s reached a ceiling; a point at which you need to seek investment partners as a growth tool. Many mature businesses approach an intersection at which it becomes clear that they need to unlock capital, identify mentors, or collaborate beneficially with other subsidiaries.
If your goal is to join an investment holding company, what are the steps involved and what can you expect from the process?
Sustainability and scalability are the key
To begin with, it’s important to clarify the difference between a private equity (PE) investor and an investment holding company. PE investors need to go into an investment knowing what their exit strategy will be, while groups choose to invest in businesses that have shown themselves to be sustainable and scalable. As long as they continue along that road, the group is more likely to hold onto them. You are also a member of that group, and subject to its board.
In the case of MICROmega, we seek first to understand the business. If we are able to do that, we look for sustainability and scalability, and if these characteristics are clearly evident, we go on to pursue an investment opportunity. This is typical of investment holding companies.
Once we become the investment holding company, we try to remove as many of the subsidiary’s distractions as we can: Alleviating administrative and financing burdens so that business owners are free to focus on growing the business. In our experience, growing businesses become more and more administratively intensive, which can bog entrepreneurs down.
This is ultimately a partnership, so everyone should benefit from the association. At the same time, you need to be sure that the investment holding company shares your values — this is a long-term relationship, and you need to know that you’ll be happy down the line.
What would-be subsidiaries need to do
1Define exactly what you want
While there are some basic strategic values that any partner should be able to bring to the table — namely, access to capital, industry-specific networks, and economies of scale — it’s wise for an investor-seeking business to have a predetermined idea of the specifics that they require from a potential strategic partner.
2Research, and research again
Any long-term investment relationship should begin with extensive research on the investment partner universe. There are many potential investment partners out there, but each has specific investment mandates, sector or industry preferences, and value preferences. Ensure that you can identify and understand these.
3Be clear on your own risk profile
The quantum of funding required will impact the choice of funding partner. When you understand your risk profile relative to the type of returns on offer, you’ll be able to determine, and strive to seek out the most appropriate funding source.
4Unpack your plan for the capital
Businesses seeking to be acquired should be clear on what they will do with the capital to be contributed by the investment partner, and how growth will be achieved.
5Ask the investor the right questions
I’m a firm believer in would-be subsidiaries ensuring that they adequately evaluate potential investors. The starting point is to ensure that the interests of both parties are aligned.
Thereafter, further questions should cover:
- Investors’ detailed track records
- Their investment mandates
- The returns that they target
- Their typical risk profiles
- The origins or sources of their funding.
6Ensure a sense of shared spirit
It is essential that the investor and the organisation’s priorities and approaches are aligned at the outset; that they are on the same page. Many things can go wrong between entrepreneurs and financial partners, and the worst outcome is that the investor crushes the entrepreneur’s pioneering spirit.
In such a scenario, no one wins. This is why I believe that both parties should be happy, with a sincere sense that they have entered into a partnership that will create value on both sides.
Regardless of who your investment holding company is, you should expect it to provide access to capital and support throughout the business; provide mentorship and ideas around innovation; and help you to create an environment in which you are able to focus on innovating, and not on administration management.
- Do you know what you’d like from an investment partner?
- Have you thoroughly researched potential partners in your sector?
- Have you determined your risk profile versus potential returns?
- Do you have a plan on what you intend to do with any capital raised?
- Do you have a clear list of questions to ask any potential investors?
- Have you evaluated whether there is value-alignment?
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