Twice-a-Year Billing
"We provide pension administration to companies throughout the United States. Our work for them is done annually. However, we bill clients one-half the estimated annual fees at the beginning of each year before we start our annual work. The actual work does not start until that bill is paid. All services are suspended or terminated if seriously delinquent. "The initial billing amount is not recognized as revenue until the completion of work. On the final annual billing, any prepaid amounts are deducted. This procedure has been successful for many years." Thanks to Rick Barto, Collection Coordinator, Lexington, Gold River, California =========================
Good Service Means Good Payment"In the transportation business, once you have reached your destination and released your shipper's product, you are at the mercy of the customer regarding if and when you will get paid. Sometimes, the only assets your customer may have are his chair, telephone, and computer. Being prepared ahead of time will make all the difference. Timing is crucial to service-oriented companies. There are occasions when a shipment will be picked up and delivered before the credit department is aware that this has happened. Therefore, taking the proper steps and following the procedures you set up will greatly increase your odds of getting paid. "Get with your sales team and put together the rules and procedures you will use. Be flexible in your rules. For example, we give sales and customer service the option to take the first load with the customer's understanding that there will be a credit report on its company. If its credit does not meet our criteria, that shipment will be delivered Freight Charge Collect. We will not release that shipment before receiving a check. Usually, the customer meets our criteria; however, if the customer does not, we have been up front and explained this to the customer before accepting the load. "Once the sales team has put together the rules, train all parties involved. That includes all new and existing salespeople, customer service, operations, and collectors. Always keep your sales team involved with credit and collections. The sales team is the greatest tool we have in keeping up with a customer's activities." Thanks to Ralph Boswell, Manager, Credit & Collections, Landair Services, Inc., Greeneville, Tennessee ======================== Everyone on the Same Page "While we are not totally a service company, the products we sell are often comingled with other suppliers, and identification problems are obvious. But whatever the product or service that is provided, collection of the account begins when the account is initially established. "It's one of the basic lessons learned: If properly established, an account is half collected. Make sure your customer knows what your terms are and that you expect them to be maintained. This is most important with customers that may be financially sound but have a pattern of slow pay. We acknowledge terms when our sales reps first contact the prospective customer, and again when we approve the account via a letter of welcome. In addition, we may ask our sales rep to make an additional contact for the customer's personal commitment to terms. There is always less chance of a problem when everyone knows what's expected." Thanks to Lance E. Harvey, CCE, Business Credit Manager, Agway Petroleum Corp., Syracuse, New York ==================== The Service-Call Ploy "We sell parts to accompany the service we perform. I suppose one could say we can hold off on future parts orders if the service is not paid for. Mechanic's liens are available in some instances, and this can help, although the dollars involved in service are typically small and carry little weight when filing a lawsuit. "One can always warn the customer: 'There will be no more service until this invoice is paid, or the next service call will be cash in advance plus the last service call.' Questions arise, such as how long does one want to wait for that next service call so that you can attach that last invoice? Will the customer call your company for that next service call or some other outside service company? Then there is the customer whose machines are repaired so that they can be sold. This normally occurs just prior to the filing of bankruptcy. "In an attempt to prevent the above, we perform a thorough credit investigation and receive a written purchase order prior to performing the service. And, of course, we hope for the best." Thanks to Russell L. Heller, Credit Manager, Mitsui Machine Technology, Inc. Editor's Note: The above tips originally appeared in the forum column of Credit & Collection Manager's Letter.
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