Rejecting an order is hard to do. There’s the voice in the back of your head warning that you may lose the customer altogether.
Depending on your industry, there’s a risk with every order you fill. You know those risks like the back of your hand. However, it’s not like you have zero control. You take measures to reduce your risks every day. When it comes to POs, minimizing the risk starts with those who process them.
Your order-entry and sales personnel are a great line of defense for catching any deal-breakers that find their way onto a PO. Train them well and save yourself some headaches.
Personnel should decline a purchase order in the following circumstances:

PO lists incorrect credit terms
Pricing is incorrect
PO references a return policy that doesn’t match yours
PO lists penalty clauses that are not part of your normal terms of sale
PO lists FOB (freight on board) terms that differ from yours
PO lists a different legal name from your records

It is important to note that to decline a PO does not mean you have to give up on the sale. It just means that you need to discuss changes that need to be made with your customer before the PO can be approved. A botched PO that makes it through the entire fulfillment process can be a potential problem later on. An incorrect price, for instance, may lose your money to the customer’s gain. And he’s going to do exactly what you think he’s going to do: hold you to the price on the PO. And he’d be in the right.
Insist upon careful inspection of every PO down to the letter and insist upon written amendments (no oral agreements allowed). Make it right the first time to avoid wasted time and money.

Not everyone is cut out to be a credit manager. But those that are stand out. They not only possess the leadership skills needed to motivate their team, but they’re innovative and creative in their approach.

Truly outstanding credit managers create habits for success in their chosen field. These 5 habits are what makes them rock stars:

#1. They make a habit of personal productivity

Great managers not only delegate and oversee, but they also do their fair share of the hard work. They manage themselves with the high level of expectation in which they manage their team staying on top of tasks to prevent backlog.

#2. They’re creative thinkers

In this industry, professionals routinely face complicated problems in need of creative solutions. The most successful credit managers are the ones willing to move beyond traditional means out into creative realms to solve issues. For example, being willing to try new software or even re-arranging the office layout for better productivity and communication. The old, “But we’ve always done it this way” excuse won’t work with a creative manager who is bent on finding a better, more productive way to operate.

#3. They know what goals to set

It is easy to set unreasonable goals for your staff. The true mark of a great credit manager
is knowing how far they can ask their staff to reach. This does not mean they set easy goals, it means they know what goals are possible and will push their employees to reach new heights.

#4. They influence those around them

Leadership, in general, requires the ability to positively motivate others toward a common goal. Credit managers must be able to convince leaders in their company to try new approaches, explore the latest software, or expand personnel. They also can influence those under them to try to things and constantly push the boundary forward. Being able to influence others to ‘get on board’ helps move the company forward.

#5. They value their team

Management comes with authority. Not everyone handles authority well. The truly great credit managers know how to authentically show appreciation to their team members. They lead by example, offer growth opportunities and help where it’s needed. A credit manager is only as good as his team and a great credit manager not only knows this but is constantly looking for ways to improve the people around them.

One of the best things you can do to increase the amount of bad debt you collect in-house is train those responsible for collecting it. This may sound obvious, but in many cases few companies devote the time and effort it takes to really improve their collection efforts. Of course, it may just be easier to outsource, but even very little training can yield substantial long terms results. Here are some of the things our collectors have found to be most helpful.

Do not accept everything your customer says

Anyone can call a customer, hear an excuse for why payment is late, and then call it a day. Customers will always have reasons for why they have not paid, a good collector will understand be able to understand what excuses are real and what ones are not. A good way to go about figuring this out is to simply ask for more details. Real reasons tend to hold up to the test of scrutiny while made up ones tend to fall apart once they are prodded.

Do not forget you are also in the business of customer service

This is one of the most important pieces of advice to tell new collectors. Under no circumstance should you bully or intimidate your customers into paying. You should remain firm, but you should always try to try to work with the customer, not against them. People tend to respond much better when they think you are on their team.

Know how much is too much

Calling a customer is great, but calling them 10 times in a day is not. While this may be a silly example, collection efforts abide by the law of diminishing returns. This means that, at a certain point, more emails, calls, or letters will help less and less. It is important to be persistent, but never overbearing or excessive.

Understand the big picture

It is important to always consider the reward to effort ratio. Meaning, the more effort required to collect an account the larger the reward should be. At the end of the day, a collector’s job is to recoup the most they can for the company. If you spend 90% of their time on a small account, you are leaving money on the table. Of course, you should not let customers slide just because their account is small, but at the end of the day, it is important to understand the bigger picture.

Though in some cases you will have to outsource the collection process, in many cases some simple training on how to collect the debt will allow you to keep more of that money in-house.

The current unemployment level of 4.4% is around the lowest it has been since the months leading up to the financial crisis of 2008. This seem like great news. More Americans are working. More companies are expanding. The economy is growing, but growth can sometimes spell trouble for credit departments if is not handled correctly.

The calm before the storm 

So this sounds great for all those businesses who are waiting for their accounts receivables to finally come in. They sold particular business goods on credit, trusting that they would be paid at a later date. With this increased revenue, businesses around the country should have the cash on hand to make good on their past debts and balance their books. Many creditors are happy now, and the debt collection business just became a bit easier.

However, this may only be temporary. Companies are growing, so they buy more goods from creditors and hire more employees to handle the load. What can happen, though, is that some businesses do not forecast their needs appropriately and tend to buy and hire more than necessary.

So instead of hiring the two workers that are ultimate needed, the business ends up hiring 4 or 5. Instead of buying x number of materials on credit, they buy 2x. This all has a way of working out in the short run, but when growth either slows or is not as large as was expected the bills start to pile up.

So sure, low unemployment numbers can be great – but just don’t let your customers get too ahead of themselves.

Small business owners typically find themselves wearing many hats. One day you may be the business best salesmen, the next you are worrying about how to pay for a new office space. One of the many jobs you may have to take on is that of debt collector. Its not a fun job, but being good at it can be very beneficial to your bottom line. Here are some tips to help you collect debt yourself.

Know what you are going to say

One of the biggest mistakes you can make is assuming you can just “wing it. Having a script and rehearsing it before hand allows you to have a confident demeanor and can go a long way to securing payment.

Keep it short and sweet

You do not need to give a long winded explantation about why you need to get paid. A short, well rehearsed, and confident message will let your customer know you expect to be paid and thats the end of it.

Be well informed

You should know as much as you can about the account before you make the call. Do they have a history of late payment? Are there any extenuating circumstances you should be aware of? You should also view everything in context. If they work in an industry that has been hit hard economically, you may have to settle for less in the end.

Follow up

Do not let a customer make empty promises just to get you off the phone. If they claim the person you need to speak to is out of the office, find out when they will be back and call then. If they promise to pay but end up delaying, give them a call back. Maintaining your persistence will show you are serious and serve as a continual reminder of the debt they owe.

There is no one size fits all solution to debt collection. Every customer will be different and sometimes you may have to make a change on the fly. With that being said, following these general guidelines will provide you with a good baseline to improve your collection skills.

Even with the best of intentions, credit professionals will still make mistakes. This is the price of doing business sometimes, but here are 7 mistakes that can be easily avoided with a little training and self discipline.

Mistake number 1:

Lack of a healthy dose of skepticism. Some of the best credit professionals rarely believe their customers. This is not a knock against their customers or a sign of trust issues. It is simply part of their job to question everything in order to make the best decision possible.

Mistake number 2:

With that being said, mistake number two is failing to realize risk is part of the game. Even if you question everything, extending credit is not an exact science. You will never know for certain if your customer will pay. Sometimes the only way to make money is to take calculated risk.

Mistake Number 3:

Failure to see the warning signs. Keep your eyes and ears open for the flags that say ‘Trouble’.

Mistake Number 4:

Settling for the customers proposed payment plan. Negotiation is almost  always an option.

Mistake Number 5:

Failure to view time as the enemy.  The more time that passes, the harder it will be to collect. Sometimes you have to know when to give up and turn the account over to collections

Mistake Number 6:

Accepting the customer at their word. While its great to hear the customer say they are going to pay, it is even better to get that in writing.

Mistake Number 7:

Assuming that your company is the only company your customer owes money to. In many cases this customer may be receiving multiple phones calls a day about their outstanding credit. You need to make yourself noticed in this crowd.

What are some mistakes you see your credit professionals making?

Many companies will begin to experience the typical summer slowdown as consumers spending habits are disrupted by the summer heat and activities. Of course, seasonal business such as pool supply stores and beach hotels will not feel this summer slump, but many business will see the summer months hurt their bottom line. Here are some good ways to save money and use the added free time to improve your business:

Reduce your inventory

If you typically see customer demand wilting in the summer heat, now may be the time reduce your stock on hand. This not only prevents lost revenue but can also make your business more flexible moving into the busy fall shopping season.

Adjust your schedule

Air conditioning cost can skyrocket during the warm summer months. If it is possible, you should consider shifting any heavy electronics use to the morning and evening when it is cooler outside. Opening some windows or bringing in some fans can also help quell the mid day heat without breaking the bank.

Summer Specials

While this will vary widely depending on your business, it is often beneficial to run summer deals in order to increase sales and traffic to your business.

Use your extra time wisely

If you have extra time due to a summer slow down, try to be productive and plan for the future. Make a list of things you want to accomplish and go at it. This can be a great time to look at a long run view of your business. Maybe that means learning a new skill that you think will come in handy later down the rode or maybe you think it is time to increase your online presence. This can also just be a great time to get organized and cleaned up. Whatever you decide to do, do not waste this valuable time.

Does your business slow down during the summer? What do you do to prepare?

Even the best of us can get caught up in the heat of a conversation. Dealing with customers who refuse to pay their bills can be a very frustrating job, but here are four things that no customer wants to hear.

Using the term “Have to”

No customer wants to be told what to do. It is important to be firm on your position and make the customer know where you stand, but demanding a customer do something rarely compels them to change their mind. Call it human pride, but people want to feel like they have a choice and are complying on their own accord, not because they have to. An alternative to this would be to give your customer different options of what they can do. Even if all these options are similar or equally harsh, giving the customer a choice always helps.

Anything that suggests you or bored or do not care.

This may be your 100th call of the day, but to your customers it is their livelihoods. It is important they feel like you care and are not simply trying to get paid. A little compassion can sometimes go a long way.

Using the term “policy”

Nothing will annoy a customer more than if you say “well I wish I can do that, but its against our policy”. It sounds like you are giving them the run-a-round and do not really care. Always try to offer alternatives and focus on what you can do for them. Try to make it seem like you are on their team and are fighting for them as much as you can.

Yelling or taking out your frustration on them

Getting angry and screaming at a customer almost never helps. While a customer may frustrate you, it is always important to keep a level head and work with them. Yelling and screaming will simply impede or ruin any progress that has been made on the account. You should remain firm and professional in your conversations, whether that be over email, on the phone, or in person.

Obviously there is not a one size fits all policy when it comes to collecting debt and in some cases these tactics may be necessary, but overall these practices should be avoided. It is almost always better to work with your customer than against them.

What is your export potential for your business? Can you export your product? If so, what are the regulations? The questions are many!

To get a handle on the aspects of foreign trade, we encourage you to check out the International Trade Administration’s YouTube channel.

You’ll find short videos from foreign regulations to export counseling including this one we’re featuring here: