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  • Collecting Mother's Day Receivables

    The sale isn't complete until the cash is in the bank.

    Your Most Important Task.

    Most attorneys think their most important work is legal. Doctors think it is medicine and patient care. Retail florists think it's flower quality, design, and customer service.

    All those are important. Without them, each profession would cease to exist. However, from a strictly business point-of-view, getting paid is the most important activity.

    If you don't get paid, you won't stay in business very long. So, it's time to devote your attention to one item on your balance sheet - your receivables. How much work have you done that you haven't been paid for yet? Will you ever be paid?

    Accounts Receivable Profile.

    First, the good news. If you're a typical retail florist, most of your customers will pay you… eventually. Only about one-half to one percent of charges become bad debts.

    On average, 60 percent of your customers will pay you after the first billing. Another 30 percent will pay thirty days late, once they receive the second statement. That leaves 10 percent you'll have to work hard on to get your cash.

    These averages assume you're doing a reasonable job collecting. If not, things will last a bit longer.

    Don't Wait.

    The key to collecting receivables is to act quickly. If you invoice your Mother's Day customers the week after the holiday, you will collect a lot of your money before the end of May. If you send out statements at the end of the May, you're probably going to wait until June to begin seeing checks come in the mail.

    Once an account gets in the "Past Due" column, it's even more important to act quickly. Remember, when a Mother's Day receivable is 30 days past due, it's the end of June. Eight weeks after the product went out.

    Make Contact.

    Of course you'll want to send a second statement. But don't stop there. Contacting the customer personally will speed things up. Go over your past due list. Divide it into at least three categories:

    1. Good customers who will pay that bill. You don't want to bother these customers.
    2. Customers who currently owe you $50 or more.
    3. Customers owing less than $50.

    You might not want to spend too much time initially on the third category. You'll gain the most by focusing on those who owe the most. Start with a letter or a phone call. The phone call is best. But, an initial letter will get results too.

    If you haven't already, you'll need to set up a shop policy on collecting. This should specify who gets letters. When the letters are sent. Who gets phone calls. And when the phone calls are made.

    What to Say.

    Collection calls have the potential of being very unpleasant. And, you certainly don't want to embarrass or offend good customers and lose their business.

    Your first contact needs to be friendly reminders, not attacks. A telephone call might start like this, "Hi, this is Kathy at ABC Flowers. I was calling to make sure we had the correct address on your account. We haven't received payment for your Mother's Day order and wondered whether we sent the statement to the correct address."

    That opening will allow you to verify information and give the customer the opportunity to tell you when they are going to pay.

    A letter could be a "reminder" stating that you assume "nonpayment was merely an oversight."

    Get Tough.

    You need to get tougher with each contact. When an account becomes 60 days past due, assume you have a problem. Your receivable could very easily turn into a bad debt.

    It's time to get direct and confrontational. "When can we expect your payment?" "May we send our driver by to pick up your check?"

    If you haven't been able to collect the balance after it hits the 90 days past due column, it's time to put the account up for collection. Give the customer one last chance to pay, with a deadline, before you do.

    If the threat of a collection agency doesn't do the trick, odds are nothing will. Stop wasting time. Get on to more productive activities.

     

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