Why should you chase your customers before the due date of your invoices?
Any commercial relationship is based on mutual commitments shared between the seller and the buyer. The buyer undertakes to pay the price of the service or equipment delivered on the date specified in the contract and invoices.
However, the buyer frequently forgets, at least temporarily, this commitment. Several reasons led him to this:
- The business relationship established by nature a favorable balance of power in favor of the buyer who takes advantage of it consciously or unconsciously.
- Cash flow difficulties or administrative complexity are pushing companies to delay payments to suppliers. Accounts payable are the only funding ressource that is free.
- It is easier to get cash from suppliers debt rather than bank credit especially in the current banking environment (Basel 3).
- Non strict compliance with suppliers due dates does not imply the immediate consequences applied by the Bankers (bank charges, blocking lines of credit ... etc.).
Moreover, this type of recovery action has a number of significant advantages:
- It allows you to start the relationship with the buyer on a soft and very customer-oriented base as the client is not overdue yet.
- It promotes early identification of any dispute which would prevent the payment of the invoice. It may thus be treated and resolved quickly to increase customer satisfaction and get paid quickly.
- If all goes well, a promise to pay is given by the buyer that will be recalled if he does not comply with it, initiating the collection process in funnel.
How to do a collection action prior due date?
The recovery action takes place between -15 days to -5 days compared to the invoice due date. Since it is made in advance, the recovery is very customer satisfaction oriented.
The interlocutors are depending on the size of the company: accounts payable, general accounting, the purchase manager, the financial director or business manager.
The tone is friendly. The content mainly includes leading questions like: Is all well on the bills? Have you received the material and the invoice? If yes, can you confirm the payment by the due date? Yes? By what payment mean?
The media used are mainly telephone and email. The choice between these two is determined by the type of account.
For example, if the account has two bills with a big amount, phone call follow-up is recommended. On the contrary, if it contains a hundred of bills, it will be difficult to discuss each of them by phone. Email is preferred. Remember that email is the collection media that has the best response rate.