Featured Coaching Training: 7 Proven Principles for Managing Your Accounts Receivable
Too many small business owners continue to extend credit to customers who are late on paying their bills. This series will outline some of the best principles for managing accounts receivable effectively.
Featured Coaching Excerpt - Notes & Transcript, Part 1
PRINCIPLE #2: Collect That Cash
Lesson Nugget: Super Move #1 - Make A Call
Lesson Nugget: Super Move #2 - Send A Letter
Lesson Nugget: Super Move #3 - Understand Most People Want To Pay You Just Didn’t Bill Them
Lesson Nugget: If you have a passive approach for collecting money, you will have an immediate financial panic.
- Principal number 2, collect that cash. Okay Clay, so get into collect that cash for me. What are we really talking about here? What is important about this principal for all the thrivers that are out there?
- If somebody, for whatever reason, you invoiced somebody. You're in a business where you have to invoice, and you find that you now have people that owe you some money, there are some super moves that I use, and they work, and I'm going to give those to you, and I think this will help you. Super move number one, is you want to make the call. Don't send them a letter. Stop doing that, call them. ♫ Boop, boop, boop, boop. I'm going to do it with you. ♫ Boop, boop, boop, boop. Hey, is this Marshall Morris?
- Yeah, this is Marshall.
- Hey Marshall, how you doing man?
- I'm doing well. You know, it's Monday.
- Actually that was a false statement, because I know it's not. We're here recording. But anyway, my point is, you have this little company that I have set up, and you had bought a cell phone in our store, and I just noticed that I didn't get your final payment this month, and I just wanted to go ahead and call you, and see if you wanted to put that on a debit card or a credit card.
- Oh, so, I mean, are you gonna send me something, or-
- Yeah, well it's actually past-due, and so I was thinking you could do a debit card or a credit card, and we'll knock it out.
- Okay, well is that something I can do online?
- No, we just have it set up right now, what I'll do is run it on line right now, on the phone with you, and I'll send you a receipt in about in two minutes.
- Debit card or credit card?
- I guess probably my Visa.
- Okay, that's how you do it and I do that all the time. Cause no one's going to care more than you. Second move if it deteriorates, so check out, this is what happens, okay. ♫ Boop, boop, boop, boop.
- Hey is this Marshall Morris?
- Yeah, this is Marshall.
- Hey Marshall, I wanted to just call you real quick. I wanted to see if you wanted to do debit card or credit card.
- I didn't get an invoice.
- Actually, we had sent the invoice to you, and I talked to you last month, about debit card, or credit card, and it looks like you didn't send in a payment, and so I just wanted to call you one last time, and ask you if you wanted to do debit card or credit card.
- So how long do I have to pay this?
- Well it's past due, and so we need to go ahead and collect that money right nowski.
- Now lets pretend that you for some reason are defiant, so go ahead and just reject me. Do you want to do debit card or credit card?
- You know, Clay, I don't think I really want to pay this.
- Okay boom, boom, here we go. Thrivers, we have letters, a form letter, we can put Marshall make sure you put it on the notes here, we're going to do it. We have a letter you can send people, and you need to send these people a letter, and the letter needs to be intense. The letter's going to say something to the effect, that you have an attorney that writes it, on the attorney's letterhead, and it says, attention Marshall Morris, and it's very official looking. and It says from Accounts Receivable. Due to delinquent payment on yadda, yadda, you'll be paying a finance charge, or interest fee, or whatever your term is, you're going to pay a charge of X amount of dollars, and failure to pay, will result in legal recourse. That's us take legal action. We're going to get involved legally. Most people don't want that letter, right? I'll send a letter to you. I made the call and I sent the letter, then, this is the final move. You gotta understand this. Is that most people do want to pay you. Most people, you gotta be nice about this. Most people, I find, most, not everybody, but most, nine out of 10 people, they really do want to pay. It's just we're not asking properly. If you call somebody and ask them debit card or credit card, and you send them something, most people, not everybody, but most people will pay. You need to make sure that you do those things, I'm telling you, I have discovered that most business owners, are mailing invoices all the time. Why are we doing that? If you're a hockey coach, if you're a basketball coach, if you're an orthodontist, why are you mailing stuff? Stop doing it, just call people. ♫ Boop, boop, boop, boop. Get the payment. Why? I'll tell you why we're not asking, because most people are afraid, most people have fear, you know what I'm saying? What happen is, is if you have a passive approach, to accounting, This is deep thought. If you have a passive approach to collecting money, you're going to have an immediate, very active financial panic. That's what's going to happen.
- You said immediate financial panic if we approach finances, and collecting payment very passively.
- Okay, and let's just give you an example. Let's go with big government, and then we'll go with the companies.
- Big governments for $400 Alex, boop. Okay, Grease, so the guys at Grease are like, hey you know, everybody, we need to borrow some money. Let's borrow some money. Grease borrows money from the European Union. They keep doing it, and the keep doing it. Eventually it's a what? Financial panic, cause now they need the money immediately. It's very, very, very important that every single person listening right now that we get serious and urgent about collecting money. I'm just telling you what I do. The first of the month, I go get it. I mean, X going to give it to you. I get intense, and I'm going to collect, there's a DMX reference.
- Yeah I got it.
- I gotta collect that money, and I'm not going to stop talking about it until it's done. I'm not going to invoice you, and mail you something, I'm going to call you. ♫ Boop, boop, boop, boop. Get that money. You've got to do it. I would recommend as part of your company right now, You would just kill the whole idea of invoicing entirely. If someone says, can you send me an invoice? Absolutely, I'll send you a receipt. Do you want to do debit card or credit card? Stop doing it. This is huge. I'm telling you, six out of 10 people who own a business are not collecting their money. This is a huge problem.