Click the image for details Private Enterprise Internal Management Research/Pan Wenfu It is said that the three most touching words now are not "I love you," but "Payment has been made." Delivering goods does not mean you can get the money back. As long as sales are involved, a pile of accounts receivable is inevitable. Most companies have a huge total amount of accounts receivable sitting on their books, occupying working capital every day and generating interest costs daily. Of course, from the boss's perspective, they certainly don't want to see these receivables. They have made various demands and emphasized repeatedly, even linking it to sales staff income assessments, with the aim of reducing receivables and avoiding bad debt risks. However, reducing receivables is not something that can be solved just by the boss issuing orders and emphasizing again and again. Effective compression of receivables is the result of a combination of factors. So, regarding receivables, there are several questions that the boss must first ask himself. These are also the prerequisites for causing or compressing receivables. Prerequisite: Internal first, then external The emergence of receivables is inevitably the combined effect of internal and external factors. From the perspective of resolution order, it must start internally, first solving your own people's problems, and later solving external customer problems.

  1. Legal Clarity The first person responsible for so many receivables is not the tough external customers, but the internal salespeople. A large number of receivables gives salespeople a lot of "space" and "opportunities," and it is possible that some salespeople withhold payments or forge customer IOUs. First, it must be clarified at the legal level. The crimes and sentencing consequences involved in salespeople withholding payments or forging documents must be explained to all employees one by one through legal education: what is embezzlement, what is misappropriation of public funds, what is forging documents, the corresponding legal provisions, sentencing ranges, and even a series of problems after having a criminal record.
  2. Classification and Change Curve of Receivables According to their nature, receivables are divided into three categories:
  3. Contract-based receivables: those signed with customers, with clear payment terms or settlement cycles;
  4. Industry-based receivables: local market customs, such as stocking on credit, paying one after another, monthly settlement, etc. There may be no contract, but everyone does it this way; it's customary;
  5. Personal receivables: originally cash settlement, but due to salesperson's personal reasons, such as customer relationships, communication skills, collection techniques, personal selfishness, etc., receivables arise. After classification, quantify the proportion of these three types of receivables to see the ratio. If the second and third types account for a large proportion, it indicates there is more room to compress receivables. At the same time, present the total amount changes of these three types of receivables on a monthly or quarterly basis as a historical change curve to see whether the total amount of each type is rising, falling, or fluctuating.
  6. Whether Credit Limits Are Set So-called credit limit setting means setting a maximum credit limit for each customer. When this limit is reached, shipments must stop. At the same time, there should also be a maximum limit on the total receivables handled by each salesperson.
  7. Daily Update and Publication of Receivables As the finance department, it is necessary to update the daily receivables situation (by salesperson) in real time and post it publicly within the company.
  8. Settlement Characteristics Any customer will have certain settlement characteristics, or settlement processes. Larger customers, with standardized management, will have clearer settlement processes in the purchasing and finance departments, with clear explanations of the document approval points and time points involved in settlement. Smaller customers will also involve specific document accounting, payment personnel, settlement habits, and other factors. As a salesperson, it is necessary to understand each customer's settlement characteristics and reflect them in detail in the customer file in written form. If you don't understand the customer's settlement characteristics, you can imagine the efficiency of settlement.
  9. Dual Communication Mechanism In most companies, communication between the company and customers is single-line, meaning the company communicates indirectly with customers through salespeople. This may lead to two-way communication information blockage, exaggeration, concealment, and underreporting. Some salespeople may use this one-way and closed nature of communication to collect more and hand in less, or collect and not hand in at all. This requires the company to establish a dual communication mechanism with customers. In addition to sales personnel, the company must also have a customer service position to maintain direct communication with all customers. Whether sending notices or collecting feedback, it is important to maintain a certain frequency of communication with all customers. This can, to a certain extent, supervise salespeople's fraud and false reporting in receivables.
  10. Management of IOUs
  11. First, the IOUs issued by customers must not be kept in the hands of individual salespeople or stored by the sales department. IOUs are financial vouchers and must be handed over to the company's finance department for centralized custody.
  12. All IOUs must be directly verified by the finance or customer service department with the customer to avoid forgery.
  13. Use the prescribed IOU template with serial numbers, eliminate casual IOUs or signing on delivery notes (goods received, payment not made).
  14. Collection Skills Training Selling goods and promoting new products is a skill, and collecting debts is even more of a skill. The related actions, scripts, promotion processes, key points, and responses to common problems or scripts all involve a certain level of technical content, and special training courses must be organized. If employees have not systematically learned these professional skills, it is impossible to guarantee collection efficiency at the technical level. However, many bosses have never thought that collecting debts requires special training.
  15. Seeking Priority Settlement Even if a customer is wealthy, they will not pay all due payments promptly; even if a customer is poor, they will prioritize a few settlement targets. Therefore, no matter what kind of customer, there is an opportunity for priority settlement. As a boss, you must continuously promote this matter: how to make your company, and even your salespeople, become the customer's priority settlement target. In addition to regular sales services, you must find ways to introduce two types of support systems: 1. Systematic customer relationship system, such as customer birthdays, company anniversaries, care for customer health conditions, care for customer's children and family, customer networking events, etc. 2. Value-added services, on the basis of regular sales work, provide additional value-added services to customers, such as training, provision of management tools, cost control and business efficiency improvement plans, etc.
  16. Correlation Between Receivables and Employee Income Assessment There must be a correlation between receivables and employee income, and it should be done in both positive and negative directions. The negative correlation is relatively simple, and everyone is doing it, which is that the collection efficiency of receivables will lead to deductions in employee income. The positive correlation is to positively encourage and promote employees' efforts and innovations in receivables, especially innovations in collection techniques, continuous reduction of total receivables, and becoming the customer's priority settlement target. Collecting debts is a systematic project. These ten items are just the basics. If the foundation has not been established, the difficulty of collecting debts can be imagined. The author is a private business owner, having operated a family distributor company for many years, during which he also served as a business manager and trainer in several production enterprises. His research direction is internal management of small and medium-sized private enterprises, with main topics including personnel management, cost control, management backend construction, and the entry of retired military personnel into private enterprises. He continuously breaks down more than 400 topics related to internal management of private enterprises and keeps updating materials and solutions. -END-