Make sure the money comes back to the company

The financial situation is putting pressure on a lot of companies, and this has made working with debtors a lot harder than a few years ago. Accounts departments are struggling to get payments for delivered work. A survey from the spring 2008 showed that accounts departments in small and medium corporations typically spend 80 % of the time sending reminders to non-payers and handling related invoices.

Something has to be done. But what? The first condition is the person in charge possessing a good understanding of his/her debtors. What is important to them, and what possibilities and scope do these people have?

When the necessary information has been acquired and compiled it is time to establish an objective for the debtor relationship with the customer. Even though the objective always is to recover the full debt, it will be appropriate to set up an ongoing partial objective. This makes it possible to measure the effort as it develops, and increases the probability of some degree of recovery of the outstanding funds.

When payment is not timely, it is important to focus on communication and the human relationships at play.
It is crucial to maintain a good relationship with the customer, while ensuring payments come in. Usually the accounts department does not have much customer contact, and they are therefore not always equipped for this kind of communication. Assistance is needed. It is no coincidence that some companies get their money and others don't. It is a question of technique and tools, which can be learned.

You have to understand the considerable pressure on both parties regarding the result. The creditor company may feel let down on trust by the non-payment; but on the other hand the customer may feel exposed by the reminder for payment. If you as a creditor are not prepared for handling the dialogue, it will be difficult to reach your objectives, and there is an increased danger of the relationship not surviving.

The issue is getting the money back, and not doing this at the expense of the company's customers. Work will become much easier by providing the accounts department with the right tools via a course in debtor relationships.

Published in Erhvervsbladet, 10/12/2008.