Late Payments and Collections

With the widespread use of debit and credit cards, late payments and collections may not be an issue, but if they are, here are a few tips.

Dozens of times over the years, I’ve collected payments from stores that were late in paying for their order. Sometimes this was for our own lines, more often I called on behalf of a client who experienced trouble collecting (and was holding up that part of my monthly commission!!).

Late Payments and CollectionsThis is an inevitable part of the business, and one nobody really enjoys, but I found it really pretty easy to manage. And actually, there are many legitimate reasons why checks might be late, so NEVER assume anything.

One of the funniest stores I remember is when I called a store to inquire about a late payment. The buyer seemed shocked and told me she needed to do some checking. As it turned out, the new stock girl they hired for the season did a thorough job of inventorying the products on the shelf – but threw away packing slips and invoices along with the empty shipping boxes. After I re-sent the invoices (by fax or email), payment arrived quickly.

Not all payment issues are resolved so easily. However, collections are not difficult if you approach the issue with good common sense — and a bit of humor, too. Often, the problem is easily remedied with a simple reminder. For example, invoices are frequently misplaced or not paid because of a question with the order.

If there is one tip I can give you – well, actually two – that get you fast results, without alienating an otherwise good customer, it would be these:

1. Call first instead of sending an impersonal, always annoying, statement letter with some obnoxious hand-written note or rubber stamp. Not only does it take less time, but it serves two purposes:

  •  The issue is more personal, showing respect toward the relationship with that customer, which they appreciate… especially since the late payment is often an oversight.
  • You are more likely to get paid promptly.

2. Never exhibit even the slightest annoyance or unfriendliness in your voice.
And use R-B-R. Start with a friendly conversation, then move on to (very matter-of-factly), “I haven’t received payment yet for the “yadda-yadda” invoice… was there a problem with the shipment?” You will then find the reason or excuse for the delay, and either a request for time to check out the problem or a promise they will get a check right out in the mail. End the conversation with a bit of chit-chat and a genuine wish for their ongoing business success.

In my years in business, working with dozens of producers and hundreds of retailers, I remember only a few cases where truly aggressive action was necessary. Most of the time, arrangements for payment are made EARLY in the collections process. The sooner you start calling them, the sooner you will get paid. Just be friendly and matter-of-fact, never insulting. Watch your tone of voice. Your relationship with the store and their buyer is still more important than a prompt payment, in the long run.

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