Managing Customers and Accounts in the “New Normal.”
I think everyone can agree that dealing with customers, and furthermore, extending credit to customers can be a difficult process in regards to customer management. What I mean by this is that you or your account manager have to be proficient in the art of knowing your customers. It’s not only about checking business references when deciding whether or not to extend credit, though it is an important step in the process.
In the pre-online review era, customer sales representatives and account managers had to “get a feel” for who they were dealing with. They had to know the customer’s tendencies and patterns through trial and error, or by word of mouth. Is this customer expecting a perfect part? Was this customer typically easy to deal with, or were they constantly trying to get discounts or unjustified cleanup credits? Is this a steady customer, or are they only stating they buy from you often so you will give them a break on the price of the part?
Luckily, our Yard Management System gives us pertinent customer information at a moment’s glance. Now, by looking at “sales history,” you know for sure whether this caller is a steady, regular customer, or if they haven’t bought anything from you in the past three years. If this is a customer with an in-house charge account, you will also know how many days it takes them to pay on average, and if they have any balances that are past due. By using the information available at your fingertips, you are able to make a rapid, informed decision on how to proceed in regards to servicing your customer.
When you have an order from a new customer, use the technology available to you and do a quick search of their online reviews. This is a good “spot test” to see how they treat their own customers. Everyone gets a few bad reviews here and there, but if the majority of the reviews are bad, this should raise red flags, and you should proceed with caution if you decide to deal with them.
In a perfect world, extending credit to customers would be a simple task. They would sign for items and pay within terms, never make a past due payment, and never require a phone call from your customer account manager for payment. Unfortunately, this world is far from perfect. When you extend credit to customers, do you have a detailed application asking for relevant business information and references, while also stating your terms of trade? Are you checking their references? How have they behaved as a customer before they requested credit? A problem customer on COD is more than likely going to be even more of a problem if you give them an open charge account.
The more customers you have on account that “manage themselves,” the better off you are. These are probably your best customers in regards to volume and payment. Managing these accounts is not difficult at all. As with everything in business, you should have procedures in place for handling all customer accounts. For instance, have a schedule of when to call a customer that has past due balances. I have found that Tuesday mornings are the best time to get through to an Accounts Payable contact. Have a set day and time to make your phone calls to delinquent payers. If you are late paying a bill, isn’t someone from your Vendor calling to find out when to expect payment? Isn’t it reasonable to handle your customer accounts the same way?
Set up rules for your customers who are on charge that become past due, and enforce them on a case-by-case basis. For example, if your terms are net 30 days, it would be a good idea to have a rule that accounts will face suspension if payments are more than 60 days past due. However, it is important to make contact with your customer in an attempt to learn the reason behind their lateness. The customer may be in the hospital, they may be recovering from an emergency surgery or sudden illness, the customer may have experienced a death in their family, or they may be having struggles with their own customers’ payments.
You should never kick someone when they are down, so it is crucial to make a phone call to your customer to find out if there are extenuating circumstances that are causing them to be late-payers. If someone doesn’t have the money, they can’t pay you, period. These are customers that you should work with to find a solution that works for both of you, like setting up a payment plan, or paying a little more on each of their current orders to bring their balance down, for example. Also, it is very important to make contact with the customer quickly after their account becomes past due, so if there is a problem with payment, the balance does not get out of control month after month. A customer who falls on hard times is one you should work with. Unfortunately, there are other customers that have the money and simply won’t pay you because they just don’t want to.
There are a few customers on account that will not pay unless they receive a phone call. These are customers that complain constantly about everything from insurance companies to their help, but in the next breath tell you all about the brand-new car they bought, or the vacation they just got back from. Hearing this makes you want to ask, “Did our money treat you good on your vacation?” These are the customers that you need to watch very closely. If they get behind, make contact with them and find out the reason for their lateness. If it is not justified, advise them that their account is suspended until it is brought up current.
Managing customers can feel overwhelming, but having processes and procedures in place for customer sales and for extending credit will make this job much easier. No matter the customer, if you extend credit, you must monitor it closely. Remember, to paraphrase Marty Hollingshead, “A sale is not a sale until you get paid.”
Laura Miller, Accounts Payable and Receivable, Human Resources, Bookkeeping, Sales, Data Entry, Northlake Auto Recyclers
Full time employee at Northlake Auto Recyclers, Inc. since 2005
Northlake Auto Recyclers | (219) 937-3960 | www.narparts.com