Welcome to Part 3 in our series What To Do About Bad-Paying Customers. Last week we moved on from looking at what actually makes customers ‘good’ or ‘bad’ to the big focus of the series - escalating your credit control chasing. We touched on what escalation is at a high level, why you should be doing it, and most importantly, when you should be doing it for best results (which you now know is dependent on your customer type!).
This week we’re looking at the three methods you can use to escalate your chasing, so that you can save time, get paid sooner, and boost your cashflow.
What does an escalation look like?
Let’s revisit the three core components of escalation that amazing credit controllers will know to utilise:
- Changing the tone of your chasers
- Changing the sender of your chasers
- Changing the recipient of your chasers
Once again, the utilisation of each of these will depend on the type of customer you’re dealing with - Superstar or PITA.
Changing the tone of your chasers
When it comes to overdue invoices that require escalation, getting the tone right is key - too friendly and the wrong customer might take you as a pushover, too rough and you’ll throw sand into the well-oiled trust machine you’ve built with a great customer.
With Superstar Customers, you want to be able to describe your escalated chasers with these words, so you don’t damage the relationship:
- Light
- Warm
- Nudge
- Inquiry
- Request for update
This lightness of tone conveys to your customer that you trust and respect them - there is likely a valid reason they haven’t paid yet and you understand and assume that before anything else. This will go a long way in not only nurturing the relationship, but also coaxing them into contacting you in advance next time, should a similar problem crop up again.
With PITA Customers, you have much more tonal wiggle room and should be able to instead describe with words like:
- Firm
- Thorough
- Detailed
- Clinical
- To the point
When your late-paying customer is a PITA, you don’t want your escalation to leave any opportunities for them to continue dodging you. It’s well established that they consistently pay late - you know it, they know it. Being as clear and concise as possible, without being rude, will leave it hard for them to continue dragging the invoice out.
Changing the sender of your chasers
With Superstar Customers, you always want to escalate the sender of your chasers to whoever has the best relationship with them - a person who liaises with them on a regular basis and has built up a solid, friendly rapport - not necessarily by seniority in your company. If you escalate to someone too senior, it can seem alarmist and panic your customer. A great example of this is escalating to a salesperson (potentially less senior than finance team member who was previously chasing), rather than the CEO or MD.
With PITA Customers, you always want to escalate the sender of your chasers to whoever has the greatest job title weight but doesn’t have a strong relationship with the customer. Escalating to a sender like this will allow you to put the pressure on the customer to pay, without damaging the customer relationship - it gives your sales team deniability, so they can continue cultivating new business with them. A perfect example of this is escalating to a more senior member of the finance team who hasn’t been involved in any chasing to date.
It’s always worth keeping in mind this rule of thumb when escalating the sender - typically, it’s best to escalate the sender one chaser before escalating the receiver, for both Superstar and PITA Customers.
Changing the recipient of your chasers
When you’re escalating the recipient of your chasers, there are two big factors to consider - influence and authority.
Influence here is characterised by members of your customer’s organisation who are a big name. For instance, if you sell a marketing product, your customer’s CMO is going to have great influence when it comes to issues involving you.
Authority here, on the other hand, is characterised by members of your customer’s organisation that have impact in getting payments made (although not necessarily in getting a specific invoice-in-question paid). This would include your customer’s CFO, for example.
If you keep aware of your customer’s payment habits and processes (and you should), you will have a pretty good idea of who’s going to have authority and influence in your customer’s organisation, for the problematic invoice in question. If you don’t, you’ll have to do some detective work - with small businesses this can be quite easy but medium to large organisations can prove much more tricky in identifying, and getting in contact with, people with authority and influence. Scour company websites and LinkedIn to gather potential leads of authority and influence, and don’t be afraid to pick up the phone to reach them!
When you do finally have the contact for the appropriate person in your customer’s organisation with authority and influence, escalate your chasing to them, although ensure you’ve escalated your sender at least once first. These rules apply for both Superstar and PITA Customers.
Up next...
Over the coming weeks we’ll be continuing our journey of exploring What To Do About Bad-Paying Customers. In next week’s post, we start taking a look at last resorts - with a focus on legal letters.
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