Keep Customers Coming Back
By Rhonda R.
It’s true: people who owe you money do not like you! They
feel guilty if they’re late with a payment and burdened that they’ve
procrastinated. They know it’s not your fault, but they feel
pressured and unhappy. Today, clients are more stressed than ever
before about finances. Your customer can be extremely upset if he
or she receives a financial surprise. It is wise to remember that a
surprised customer will first be an embarrassed client, and then
will become an angry customer!
If you want to avoid all this stress and anger, take the
following steps to clearly outline your company’s financial
policies. Clear financial policies are a very real part of customer
service, especially when presented by a warm, empathetic,
knowledgeable staff. In addition, for a policy to be effective, it
must be well understood by staff and backed up by the owner and
health of your accounts receivables:
As a basic guideline, your accounts receivable (AR) balance
should not exceed one half to one month of production.
Run a “clean”
AR report that does not include credit balances and analyze the
60 day and over column, as well as the 90 day and over column.
In general, the 60 day and over column should not be more than
4-6 percent of what your clients owe you. The 90 and over
column should not be more than 2-4 percent of your AR.
also to run a past due report. Any accounts 30 days past due
require a follow up call from the team member responsible for
role is to hire, train and provide oversight for your financial
health. Even with the finest office manager, the owner should
still be involved and should be the leader in the business.
should review the AR on a monthly basis, or more often if this
area of your business needs additional attention. Many offices
have a policy that “everyone does everything.” With a more
systematic approach, the owner can oversee those accountable for
particular areas. In addition, your team members will know who
to ask for what, such as which staff member should speak with a
particular client. Designated office responsibilities with
clearly defined goals and expectations will decrease stress and
increase professionalism in your office.
If your AR balance is less than one half of your monthly
production, your financial policies may be too firm and staff may be
unintentionally running clients off. On the other hand, for your
established customers of record, you might consider flexibility in
payment if the client has demonstrated a good history. If you do
offer financial options, however, do not extend them for more than
three months and have a re-bill policy, or inform the client of
interest due after or during the three-month period. Also, verify
the credit history of the client prior to advancing credit.
Check with your
state law regarding interest regulations and present a written
policy to the customer.
Do you have old
accounts on your AR that have been turned over for collection?
Adjust these off so you have a true AR that is collectable.
Enter the adjusted amount into the client’s record and keep a
separate ledger file for this activity. Check with your
accountant and clean up your Accounts Receivable report.
Sit down with your
team and write out your office financial guidelines. The collection
of money owed is the responsibility of the entire team. Once the
entire team creates the guidelines, the owner needs to approve and
stand behind them. Have you ever noticed that the client will try
to go around the staff person and ask for a discount? Or ask if they
can pay “over time” instead of paying as the service is completed?
As an owner or manager, you will undermine the client’s trust
and respect of your staff if you allow even one customer to do
this. One very kind-hearted business owner said, “There’s no ‘end
run’ involved! I just plow right thru my front office team and give
the discount up front to the customer and I know I’m the problem!”
Discuss the philosophy of your business with your team. Each
office is different. If you feel compelled to give a courtesy,
consider a limited discount amount rather than a discounted
It is advisable
to craft a “change of policy letter” regarding your position on
cash courtesies or changes in your office’s financial policy.
The worst thing you can do is surprise the customer! Remember
that a surprised customer is an angry customer! Do allow the
prior courtesy level and let the client know, in a friendly,
warm manner, why you’ve had a change in policy. And then the
new courtesy level would apply for all future procedures or
managers: Reinforce the efforts of your office team. If an old
friend asks for a courtesy, let him know that your staff will
handle all the financials for the two of you. If the owner
shoots down the financial coordinator, she may not want to
enforce the policy again! Owners who make arrangements contrary
to office policy create stress for their staff and ultimately
can create spoiled clients who will continue to go around the
staff. Spoiled clients are created by nice, caring owners who
want to bend over backwards for their clients, especially early
in the relationship. These clients become quite demanding and
are often rude to the office team, dictating when they’ll come
in, when they’ll pay, and how much they’ll pay!
The client is
prepared in advance regarding their responsibilities with payment.
office team’s responsibility is to say: “Will that be cash,
check or bank card?”
If the work or
service is extensive, consider breaking the client’s portion
into three segments, with one third due at the beginning of the
service, one third half way through the project and the balance
at delivery. If the work is done in two procedures, then either
the entire amount is due to begin, or split into two payments.
For well-established clients with a great track record, consider
half down and the balance in 90 days. During financial
arrangements, present the client with a written estimate, have
the customer sign one copy and keep one copy in the business
These are some of the guidelines you will need to define with your
team. There is much more to consider: verbal skills, past due
accounts receivables, and how to connect with the client, how to
express warmth, empathy and concern. Firm, consistent financial
policies are just one layer of the customer service that your
clients deserve and expect. Your challenge is to have an open,
honest, productive team meeting and look at your financial
policies. How healthy is your business?
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