By: Abe WalkingBear Sanchez

The Most Profitable Sales Call: Calling Past Due Customers
 
Current Credit Customers Keep Buying and Buying and Buying

The four day national business conference featured about 40 business speakers. One of the speakers
was a sales management expert; I was speaking on B2B credit management.

I was telling the "Sales Management" speaker that as a corporate credit manager I’d print out a list for
each sales person of their past-due credit customers. I’d might as well have called it the "Avoid" list.

"Don’t sales guys understand that the most profitable sale is the repeat? That it costs 8 to 14 times as
much to find and sell new customers as it does to keep and sell to existing customers?", I asked.

"Unlike you, Abe, most salespeople like people and want to be liked in return. They avoid anything they
think of as being confrontational.", he said. It’s a good thing for the smart aleck that I haven’t hit anyone
since I quit drinking.

Believe something and it’s true, at least to you. In business there still exists an out of date and misguided
belief that past due credit customers are bad; that past due credit customers can’t / shouldn’t buy. This
"risk management" view of credit and A/R management results in credit managers spending much of their
time releasing orders from the "credit hold / do not sell" list, and leads to salespeople crossing streets to
avoid an oncoming past due customer.

The only credit customers that should be placed on "credit hold" are those few who for whatever reason
can’t pay or who are trying to avoid paying. The vast majority of past due customers are good for the
money and will pay. There are good reasons why most past dues don’t pay within terms.

Past due customers not only represent potential lost sales, they also represent an opportunity to elevate
customer service levels. Listen to past due customers they’ll also tell you how to improve on your business
processes.

Many credit customers become past due because they’re disorganized or lazy about their A/P function..
Some are playing games with paying vendors and suppliers; mistakenly thinking that practicing cash
management (using vendors/suppliers as a form of short term financing and not paying late charges) is a
good thing. Many more past due customers don’t pay because something is wrong.

There are also customers who don’t have the ability to pay when due, but can and will pay in the near
future. A small percentage of customers can’t pay and have no idea when they will be able to pay. These
are prime candidates for a bankruptcy filing. The smallest percentage of past due customers are those who
are trying to avoid payment altogether; the best thing to do with these "avoiders" is to write them off and
assign them to an enforcer; a collection agent or attorney.

The reason for contacting past due customers is not to collect, that what the enforcers do, but to "complete
the sale." The goals being to keep credit customers current and buying, and to identify and control the small
percent that represents a potential for loss.

The same 4 major steps are found in both sales and in completing the sale (past due A/R management).

In sales the decision maker is the person who can say "yes." In past due A/R management it’s the person
who can tell you when you’ll be paid and just as importantly why you weren’t paid when due.

The best opening in a completion of the sale call is "Our records show invoice number so and so,
dated __day of __ for ___dollars still being open, can you please help me with this matter? Shut up and
listen.

In sales we ask questions about the customer’s needs or desire so that we know their "hot button."
In completion of the sale we ask questions about why the customer hasn’t paid so that we can
determine
the account type.

In sales we want to point out how our product/service meets or exceeds the customer’s expectation,
their hot button. In completion of the sale we want to resolve why the account is delinquent.

• If a customer is disorganized or lazy we become a friendly squeaky wheel.
• If something’s gone wrong, we fix it.  
• If a customer has a short term cash flow problem, we work with them and encourage them
  and continue buying from us.
• If a customer has no idea when they’ll be able to pay we need to cut off further credit sales
  and move at once to improve our position on the account (liens, notes, personal guarantees,
  returns, barters).
• If a customer is uncooperative, lies and breaks payment or other arrangements we need to
  cut off further credit sales and then get them out to a collector.

In both sales and completion of the sale, we want to repeat the understanding and then calendar
the account for follow up.

One of the best credit managers I’ve ever met was a woman in Evergreen, CO. The first thing you
noticed in her office was a bulletin board covered with pictures of children. There were black kids,
white kids, Asian and brown children. They were her customers’ children.

"I love my job" she said. "I get to come to work and call my friends all around the country on my
employer’s long distance service." By coincidence all her friends worked for her employer’s
customers in the A/P department.

Calling past due customers can be enjoyable, if you make it so.

Early and cheerful contact combined with fixing things that go wrong, and the identification of
potential losses leads to reduced losses, better cash flow, more repeat sales and higher customer
service levels and customer retention.

Abe WalkingBear Sanchez is an International Speaker / Trainer / Consultant on the subject of
cash flow / sales enhancement and business knowledge organization and use. Founder and President
of www.armg-usa.com, WalkingBear has authored hundreds of business articles. A hard hitting
and fast paced speaker, he brings life and energy to a critical business function whose true potential
has yet to be realized by most businesses.

Atradius, Irish Institute of Credit Management, TEC Canada, Vistage, CU, CSU, Texas A&M,
National Association of Credit Management - Kansas City, HTDA, BCFM, Poli Hi Solidur,
Skinner Nurseries, Deardens, Rain Bird, STAFDA, IBM, Wisconsin Credit Association, are
but a few of the groups, schools, companies and associations for whom WalkingBear has
conducted programs.

Abe can be reached through:
A/R Management Group, Inc.
P.O. Box 457
Canon City,  CO  81215
(719)  276-0595
e-mail:  Abe@armg-usa.com
website:  armg-usa.com