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The Importance of Payment Collection Some salespeople are eager to make sales and adopt a low-key attitude towards transaction terms, especially payment collection. For example: "Any time is fine!" or "We'll talk about it later!" As a result, transactions begin in a vague manner, and problems arise when it's time to collect payments. Educating employees that "payment collection is important" and "chasing payments is difficult" can prevent "unnecessary receivables" from occurring. The impatience and侥幸 mindset of frontline staff regarding payment collection is very dangerous because they execute company policies and everything is in their hands.
Correct Mindset
- Try to conduct cash transactions as much as possible. Sales without collecting funds are worse than no sales at all.
- Collecting debts is harder than making sales. Rather than spending a lot of time and energy on debt collection, use that time to develop more and better customers.
- Rather lose this business than risk credit sales.
- Before payment collection, all sales are costs; after payment collection, the sale is only half complete.
- Overdue accounts require dozens or hundreds of times more sales to compensate.
- We cannot use book sales to pay wages and supplier payments—we need cash.
- Our mission is to create profitable sales.
The Rationality of Payment Collection and Reminders Some salespeople show a certain timidity when collecting payments. A very important issue here is the need for firm belief.
- "Customers won't stock up if they don't owe money; owing money is unavoidable."
- "The customer is tight on funds, so let him owe once!"
- "This customer doesn't seem like a fraud; he'll pay in a few days." Some collectors think that being too aggressive in reminders will upset the other party and affect future transactions. If you think this way, you will never collect payments and also fail to keep future transactions. The more the customer owes, the harder it is to pay, and the more likely they are to switch to other (third-party) purchases, making it harder to retain the customer. So, stepping up collection efforts is the best policy. If you can recover debts that seemed hopeless, otherwise, you'll be led by the nose, and even payments that could have been collected might not be recovered. Therefore, when collecting payments, if you are confident and assertive, you can often win by surprise. The mental state of the collector is very important.
Correct Mindset
- Cash collection is an unavoidable and challenging task, and chasing payments is a matter of course. Don't be timid, and don't feel reluctant or constrained by personal feelings.
- Credit sales are credit transactions, based on our trust in the customer's ability to repay, and also the customer's commitment to us, agreed upon in advance. That money is ours; the customer is merely borrowing it—so chasing payment is justified, and there's no need to feel reluctant, embarrassed, or afraid to speak up.
- The sooner you remind the customer, the sooner you collect. Customers never feel dissatisfied because they are reminded to pay.
- Customers respect professional and meticulous salespeople. Compromise on payment issues will not win customer goodwill or respect.
The Wisdom of Payment Collection—Basic Principles Master the correct mindset (as mentioned above) "Preparation" Prepare for the worst. Payment collection begins before the sale. Instead of spending energy on chasing receivables, put effort into selecting customers and granting credit early on! "Speed" After a debt occurs, demand payment immediately. According to British sales expert Porter Edward, if the credit period is within 60 days, the possibility of recovery is nearly 100%; within 100 days, 80%; within 180 days, 50%; and after 12 months, only 10%. According to a foreign institution specializing in collection, the longer the overdue period, the lower the average collection success rate. The best time to collect is within 6 months of overdue. If the debt is delayed over a year, the success rate is only 26.6%; over two years, only 13.6%. "Diligence" Frequently ask for payment. For customers who don't pay promptly, if the salesperson is too easily dismissed, the customer won't take repayment seriously and will think the payment isn't important to you, so they can delay. Frequent reminders make it hard for customers to find excuses to delay, forcing them to pay. "Persistence" For customers who always find ways not to pay, the collector must have the spirit of not giving up until the goal is achieved. A salesperson in Shandong came up with a psychological debt collection method: he designed a collection suit, drafted a collection notice to post on the debtor's door, and prepared a broken gong to bang when collecting, making the debtor lose face. He went to a debtor to collect, and the debtor initially denied the debt. After the collector showed evidence, the debtor said he had no money. The next day, the salesperson investigated the debtor's business and location, learned he had a thriving restaurant, and confronted him: "If you don't pay, I'll wear the collection suit, post the notice, and bring the gong to stand in front of your door." The debtor turned pale and immediately changed his attitude, agreeing to pay.
Note:
This method may be "low-level," but don't feel "guilty" about it because there are malicious debtors, so "fight fire with fire."
First, determine if the customer truly has money but refuses to pay, indicating malicious intent. If so, after recovering the debt, stop credit sales immediately, so there's no need to fear offending them.
"Flexibility" Be flexible. First, determine if the customer genuinely intends to default. In such cases, the salesperson can think of flexible methods, such as: before collecting, go to the market and "symbolically" help collect some debts from the customer's downstream clients; understand the customer's operational difficulties, use your knowledge to help analyze the market, plan promotions, etc. Move the customer with sincerity and service, often achieving good results. "Variation" Customers are not good or bad; they are just different. Different customers require different collection methods, provided you know as much as possible about the customer and have all relevant information.
Source: Distributor's Home -END-