Japan Implements Negative Interest Rates

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Bloomberg Business recently reported that the Bank of Japan has adopted negative interest rates saying, “Bank of Japan Governor Haruhiko Kuroda sprung another surprise on investors Friday, adopting a negative interest-rate strategy to spur banks to lend in the face of a weakening economy.”

Vice Chairman of Berkshire Hathaway Charlie Munger was quoted by Forbes saying, “I was flabbergasted when they went low; when they went negative in Europe – I’m really flabbergasted.”

According to CNN Money, “In theory, negative rates encourage banks to lend more and consumers to spend rather than save. They can also weaken a country’s currency, helping exporters.”

Japan isn’t the first to do this. The European Central Bank has already made this move with odd results. There have been reported cases where the bank ends up paying customers who borrow from them.

The idea of negative interest rates has been introduced to the U.S. but thus far, it’s not been seriously considered.

Customer In Need of Help?

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When a customer is up to their credit limit, they may be in need of help.

Quite often, when one of your customers is up to his knees in financial trouble, he’s also up to his chin in embarrassment. As a businessperson, the pressure is tremendous financially and emotionally.

For that reason, many won’t reach out to you in advance of the trouble they see coming. They’re uncomfortable. Embarrassed. And probably hopeful that they can turn things around before the inevitable happens.

Some customers don’t realize that just because they can’t pay the whole amount, doesn’t mean there aren’t alternatives. Hiding seems easier. But you know differently. You know they’re wrong about all of this.

You can show them as a credit professional that there are alternatives and that working on it before it becomes a bigger problem is a great business move!

Set your goals:

  1. Identifying the source of the problem.

Is it a temporary cash-flow problem or is it more serious? When you talk with your customer, you have to get down to the bones of the matter. Exactly what is the issue? If they’re facing bankruptcy, they may have no desire at all to move forward to fix the problem. They may be too far down the road of defeat leaving you little option but to place that customer on permanent C.O.D. or some other severe limitation. But you really won’t know until you listen to their story.

  1. Open the doors of dialog.

When you view the customer as the customer and the problem as the problem, you’re establishing yourself as an ally in working this thing out.

There is light at the end of the tunnel. Your job is to help your customer see that. Once they do, you’ll be helping to offer relief by outlining the options for payment. Remember, they want this debt paid as much as you do.

  1. Offer alternatives.

Circumstances change from customer to customer. Once you’ve established the problem, and that you’re both on the same side trying to solve it, you can then come up with the right options to make it all happen.

For the customer that makes daily purchases, perhaps a daily C.O.D. term will meet the need for a set period of time. A monthly payment plan may be a better fit for the more infrequent customer. Can it be paid off in 6 months? 8? Set that limit and put it in writing.

If the balance is large, it may not be doable to pay it off in 6 months and therefore, a longer payment plan that includes interest rate might be the right gesture. The point is, there are options that are fair to you both. Explore them together to come up with the right plan.

Your Winning Staff: How To Keep Them Moving Forward

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Business teamYour team means everything to your bottom line. Therefore, keeping them motivated, challenged, and positive should be a priority.

There are a few very simple habits you can form that will help to create the work environment that promotes your staff toward success.

  1. Be the go-to resource.

Establishing yourself as a reliable and available resource can bring a sense of safety to the work environment. When a staff member feels that she can come to you, even if she’s found herself in over her head, together you can solve problems before they rage out of control.

  1. Have your team’s back.

If a staff member ends up in the cross hairs of an angry customer and need to turn to you for support, be the back up they need. It’s not unusual for a customer to change their tone when referred to the manager who is in full support of his or her team.

  1. Make expectations clear.

Typically, people who know what is expected will meet those expectations. When the waters are murky, there’s hesitation. Spell it out – set the bar – communicate with clarity.

  1. Be reasonably flexible.

We often coach our clients to be flexible when attempting to collect a debt. It’s necessary to hear the customer’s story and then determine what level of flexibility is reasonable in that instance. The same is true with staff. Yes, being consistently on time for work is a must, for instance. But extenuating circumstances do happen.

  1. Offer growth opportunities.

People are certainly unique. Most of us want to grow … but depending on which generation you’re dealing with, not everyone defines “growth” as “climbing the ladder”. In fact, a lot of people these days don’t find ladder-climbing in the least bit appealing.

The key is to talk to your staff individually to find out what forward momentum in your company looks like to them. In all likelihood, what they are attracted to will also be what they’re good at. Provide opportunities for them to move in their desired direction.

Having a team in place that is well trained and equipped is an investment of time and money for you. Keeping them motivated and challenged, with opportunity for growth. This will build a sense of loyalty to you.

One-On-One With A Customer: Prepare In Advance

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Visiting a customer, one-on-one, is a great idea to build rapport. In fact, if you make the effort to build a solid relationship, you’re less likely to encounter past dues with that customer in the future. It’s one way of keeping you front and center so your invoice ends up at the top of the heap of bills to pay.

But if you’re purpose for your visit is to collect money owed, that’s a different kind of visit. There are things you must do in advance if you want to walk out of the office with a check in your hand.

CustomerUpdate the Customer File

If you’re to the point of making a physical visit to collect, it’s safe to assume you’ve made phone calls and sent letters to no avail. And since that’s the case, it’s also safe to assume you need to be prepared for some push back in your meeting. This is all the more reason to update the file, organize it, and study it before you head out the door.

You may find a quick visit to your customer’s website will bring you up to speed on the basics like new personnel or title changes as well as verification of phone numbers and addresses. That’s a good place to start.

Make sure you have copies of every invoice, reminder letters, emails, and notes made of conversations in the file. Depending on how you organize and what works for you, you may find it useful to have the documents in chronological order, highlighting dates and times with a highlighter.

Keep in mind this includes documentation you know you’ve already sent to them. In order to be prepared for the excuse that they never received the invoice or collection letter, have a copy to hand to them for them to read and keep.

Bullet Point the Facts

You may find it helpful to have the basic facts on a bullet point list at the front of the file. The list should include:

  • How much is due
  • How many invoices are outstanding
  • Dates of each late invoice
  • Names of contact persons you’ve spoken to about this
  • Dates and times of previous discussions
  • Past promises to pay including dates
  • An account of your attempts at follow-up (emails, letters, phone calls)

Plan Your Conversation

Collection conversations are best approached by asking questions. You will learn the solution to the problem by finding out what’s at the core of non-payment.

Before the visit, list out the questions you want answered. Do your best to keep the conversation out of rabbit holes. You simply need the facts and to come up with the solution. Asking and listening will get you there.

Analyzing and Pursuing Past Due Accounts

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You have an account that’s past due. But why?

Why is the key question to answer before you make a move. Only with the answer can you come up with a solution to get the account back on track.

Business personThe answer can come from any number of channels. The sales team may alert you to circumstances on the floor, like a diminishing inventory or the loss of a major client. There may even be a natural disaster that impacts your customer, like flood or fire. Typically, the simplest way to get to the bottom of things is to ask.

If you have multiple past dues, before you begin the process of asking about late pays, you may find it useful to divide the customers into two categories:

Those who generally keep their commitments

VS

Those who frequently break promises to pay

When dealing with the first category, the customer for whom paying late is not the norm, getting to the truth of why payments have slipped will probably be easy. This customer is more likely to tell you straight up what’s going on, unless it’s something deeply personal.

The second category of customer, the one who routinely pays late and frequently breaks promises will probably not give up the truth easily. For this customer, paying late is probably how he/she does business as a general rule. Good luck figuring out why.

No matter which type of customer you’re dealing with, it’s important to hop right on the issue. Waiting to make contact for 30, 45 or 60 days past the due date just sets you up for running the catch-up treadmill. Don’t put it off … analyze the file, strategize and begin asking questions.

Creating a collection strategy will help you streamline your efforts and collect the money. Getting to the truth of the matter gives you the information you need to take the next step toward payment.

Set Your Priorities

Size of company and level of debt will require different approaches to collection. Type of industry, may require special consideration particularly for seasonal businesses or areas of the country afflicted with drought or flooding or some other wide spread disturbance. This is the type of information that will help you prioritize your collection cases.

As an example, you may give the customer who has experienced damage from a storm extra time to pay … an exception you wouldn’t make for the customer who simply chose to pay someone else ahead of you. For this reason, we can’t emphasize enough the necessity of knowing each customer and the details of each case.

Create A Plan (Strategy)

When we talk of strategies, we’re simply suggesting a step-by-step process or plan, which includes counter-actions in response to the customer’s behavior in the course of collection. In other words, your customer may respond to your actions in any number of ways: Your strategy needs to include your counter-move/s.

In a perfect world, your first step toward receiving payment would result in payment in full. In which case, you simply make note of the details of your interaction for the file and move on to your next case. But in a not-so-perfect world, your first step may result in a promise to pay. In which case, you have more strategy to implement: a timely follow-up.

In a really-totally-messed-up world, your customer may flat out refuse to pay. In that case, you must employ a more stringent strategy that will include getting to the core of the customer’s complaint. If it’s legit, you take a route to make things right, which may often be unique to that particular situation. If the complaint is not legit, your strategy may become more complicated, requiring compromise, mediation or litigation.

The point is, having a general plan in place will help you expedite the matter even in the event of a curve ball. Yes, each case is different and may require a plan change, but with a basic strategy already in place, you’re ahead of the game.

Get the Collection Ball Rolling

Having a plan already in place will make collecting a tad easier. (We said ‘easier’, not easy.)

You’ve read this far so you already see how critical it is to understand your customer, the industry and specific circumstances in order to collect. No two customer’s are alike, even those in the same industry. Before you make your initial contact, analyze:

Size of company

Geographic location

Seasonal ebbs and flows

Size and age of debt

Industry trends

20Payment habits

Analyze Your Results

Each case deserves your full attention whether it was resolved without blood, sweat and tears or not. Document the events as they unfolded. This is information that will help you make wise choices in the future.

Negotiating With A Customer Takes Finesse

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Negotiation is an art.

It takes a boatload of finesse to negotiate successfully. Not only do you require a result in your favor, but you want to be fair to your customer, as well. When everybody wins, you’ve negotiated masterfully.

To get to that win/win result, you must do the following:

Make Good On Your Promises

Negotiations always go more smoothly when you have a history of following through on your word. If you make it your practice to only say what you mean and then do what you say, your customer will trust that this pattern will continue even in a negotiation. When you have that trust, you’re sure to make headway.

Listen Intently

We can assume that the need for negotiation arose because something in your business relationship got off track. With that as the foundation, it stands to reason that people may enter into negotiation discussions with their guard up and ready to do battle.

If you can avoid entering into discussions with that attitude, you’ll be ahead of the game. Hearing your customer out, without interruption is a great place to start. Extending this courtesy is likely to come back to you.

Do your homework

You want to establish yourself as an expert on this case. To get there, you must study the case from beginning to end and know the details to the letter. Know dates and times, promises made and promises broken, and have ample evidence to back your self up.

Consider Your Customer’s Point of View

The more you understand your customer’s needs, the better you can anticipate the angle he will take during negotiations. What’s best for his business? What would be his ‘perfect world’ outcome? If you can understand it, you can work to making that outcome work for you as well. This will help to bring about your win/win scenario.

Viewing the problem as the problem instead of viewing the customer as the problem will help you negotiate fairly for the best possible outcome for both parties.

Have You Organized Your Company for Success?

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Credit Management Must Be Top Priority

Many sales are made because the right amount of credit was extended at the right time. Conversely, many deals are lost for lack of an agreeable credit policy.

Therefore, credit management must be top priority.

The solid credit management process in a company will benefit every area of your business. From sales to marketing, fast and savvy credit decisions keep the gears of the entire machine moving smoothly and cash flowing more freely.

That’s why company organizational structure is so important.

Many companies place their credit and collections department on the other side of the building from everyone else. They get compartmentalized right out of the thick of things. And it can be detrimental to the whole.

Too much distance can keep information from flowing to the people who need to have it. By keeping credit and collections in close proximity, the company has a whole can better understand its customers. Consider the following:

The history of a customer relationship is critical to unraveling the reasons behind non-payment. Moreover, customer history can help predict future business behavior. Each department has its own interactions with your customers, unique to that department depending on what they handle for the customer. When those experiences are shared with other departments, a more complete picture of customer health emerges.

As an example, the sales department may physically see things in your customer’s business that your credit department would never see: an empty warehouse or decreased foot traffic through the store. And from the other angle, your sales team may be unaware that his/her customer’s payments are growing further and further apart. These are predictive behaviors that effect both departments. Armed with the knowledge, they can collaborate to solve a problem before it actually becomes one.

By keeping your credit and collections department located within sharing distance of other departments, critical information can help wave red flags in time to make a difference.

Have you structured your operations optimally?

Millennials In The Boomer Workplace

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We’re in a big transition period. The Millennial generation will make up over half of our work force in just a few short years. “Old schoolers” (ie Boomers) will soon be training this new generation in the work place … and it doesn’t come without its challenges.

Technology is the biggest contributor to our challenges.

Our tech savvy world changes by the minute. And while the boomer generation is keeping up pretty well thus far, Millennials clearly have an edge. They’ve grown up using computers first as toys, and now at school and at their workstations.

Learning technology is not unlike learning a language. If you learn as a child, it’s second nature. If you tackle a new language as an adult, it’s a big challenge. And because of this edge, the boomer who trains the Millennial may find the tables can turn quickly.

Because there are huge generational differences between boomers and Millennials, the following may be helpful to the boomer in making the transition. But let it be noted, this article uses a broad brushstroke when describing both sets of people

Boomers must provide opportunities

Millennials don’t view climbing corporate ladders as an appealing or inspiring career goal the way many boomers have in the past. What they relish in is experiencing new challenges. Give them opportunities for growth with financial incentives.

Don’t stick Millennials with old technology

Stay on the leading edge of technology if you want satisfied this generation of employees. They’ll not only stay with you longer (which saves you money and time), but they’ll be far more productive.

Talk with the younger generations about their long-term goals

Millennials may sometimes appear self-involved or perhaps entitled. Some suggest they appear this way because of their innate understanding of technology. They really are better than the rest of us when it comes to computers. And they know it.

For this reason, they need to see the value in what you offer them. For the boomer, this thinking feels backwards. Boomers grew up in the work force bringing TO the table. Millennials want to see what they can take FROM the table to get them closer to their goals.

If your employee has a long-term plan, find ways to make working for you beneficial for them in attaining to their goals.

Offer feedback … often

Millennials are on the fast track. They want to know what’s next and how to get there now. Instant satisfaction is their way of life.

Employee evaluations must be frequent and offer more challenges to keep them moving forward with you.

Be open to thinking differently

Boomers were raised defining a high work ethic as: staying until the job is done. That means working late sometimes or skipping lunch. The Boomer who finishes the day’s to-do list early will simply hop on tomorrow’s to-do list in order to get ahead. Boomers tend to forfeit family time or personal time for work duties when warranted (or sometimes even when it’s not).

Most Millennials see this differently. Because they’re so tech savvy, they often finish their work quickly leaving them more time at the end of the day feeling as if they have nothing to do. Therefore, many in this generation will consider the workday complete when the to-do list is finished.

The idea of forfeiting time doing the things they love in lieu of working simply doesn’t make sense to them, especially if the work has been completed. In fact, there’s incentive to finish up early if it will leave more time for personal, non-work related activities. Even if its on the computer!

This isn’t a wrong perspective … it’s just different than what Boomers were trained to think about work.

Boomers who are tasked with training Millennials will find it helpful to talk frequently and open their minds to new ways of thinking.

8 Must Haves for Your Final Demand Letter

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EightFinal demand letters must cut to the chase to be effective. To get results, consider these 8 essentials for letters that pack a punch and get results:

1. Brevity
Final demand letters are short and to the point. State the fact that regretfully, you must take a specific action if not paid by a specific date.

2. Clarity
Mince no words. What will happen if you don’t receive payment? Spell it out.

3. Requirements
Require that they act within 7 to 10 days. You may choose to extend another 5 business days under certain circumstances.

4. A name
Name the collection agency or attorney you will use in the event that this matter goes unresolved.

5. An invoice
Include the invoice in question and statements as an attachment to the final demand letter.

6. Perfect Timing
Use our suggested collections timeline as a guide for perfect timing.

7. Follow through
Do what you stated you will do if the bill continues to go unpaid.

8. Trackability
Send the final demand by certified mail, return receipt requested, or by overnight delivery.

Negotiate With Savvy

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Customer disputes require swift and savvy action. If you’re in a position to negotiate, follow these tips for success:

BEFORE YOU BEGIN DISCUSSIONS

Study the details

Don’t make a phone call or set up a meeting until you have studied everything there is to know about the case. Keep your notes and the case file ready so you can refer to information as needed.

Consider the dollar cost

Some disputes are worth hashing out while others need to be written off. Time is money, so if a dispute is only complicated by a difficult customer, it may not be worth the time.

ConfrontationDURING DISCUSSIONS

Don’t be confrontational

Instead of confrontation, begin discussions with questions. Questions open the door to dialog that may reveal a resolution you and your customer can benefit from.

Offer documentation

Here’s where keeping your notes and case file handy will pay off. In the event your customer wants proof of some claim you’re making, you’ll have everything you need to provide immediate proof.

Keep an open mind

Through the process of asking questions, keep an open mind to what your customer tells you. Perhaps the perspective he or she offers will be something you’ve not thought of before. And it could change everything.

Resolve the easiest issue first

This is a great way to set the tone for success when you are dealing with multiple issues with your customer. By coming to a good conclusion early in your discussion, you’ll be paving the way for open dialog going forward.

Make a list of possibilities

There may be many different ways to solve a problem. Make a list of the options. It will make it easier to weigh the costs and benefits to both you and your customer.

AFTER THE CONVERSATION

Put everything in writing

Write down the payment schedule you’ve agreed upon and any promises made during the conversation.

FOLLOW UP

Perhaps the most important thing in the entire process is follow-up especially when you’ve agreed to a solution that has yet to be implemented.

One simple way to do that is to send an email immediately after your conversation that outlines the promises made, the agreements you discussed and any other pertinent points. End the email with a question so that your customer will respond thus confirming receipt of the email. Even a simple end like, “Thank you for meeting with me today. Are there any questions we didn’t cover?”

Negotiating with a customer can be a tricky process. You can simplify it by following these tips.