Glear financial policies keep customers coming back

fr's rnue: people who owe you Imoney do not like you! They feel guilty if they're late with a payment and burdened that they've procrastinated. They know it's not your fault, but they feel pressured and unhappy.

Your customer can be extremely upset if he or she receives a financial surprise. It is wise to remember that a surprised customer will first be an embarrassed client. and then will become an angry customerl

If you want to avoid all this stress and anger. take the following steps to clearly outline your company's financial policies. Clear financial policies are a very real part of customer service, especially when presented by a warm, empathetic, knowledgeable staff. In addition, for a policy to be effective, it must be well understood by staff and backed up by the owner and manager.

Determine the health of your AIR:

As a basic guideline, your accounts receivable (A/R) balance should not exceed one half to one month of production.

. Run a "clean" A/R report that does not include credit balances and analy ze the 60-day-and-over column, as well as the 90-day-and-over column. In general, the 60-day-and-over column should not be more than 4-6Vc of what your clients owe you. The 90and-over column should not be more than 2-4o/o of your A/R.

Make certain also to run a Dast due report. Any accounts 30 days past due require a follow up call from the team member responsible for this department.

. The owner's role is to hire. train and provide oversight for your financial health. Even with the finest office manager, the owner should still be involved and should be the leader in the business.

The owner should review the A/R on a monthly basis, or more often if this area of your business needs additional attention. Many offices have a policy that "everyone does everything." With a more systematic approach, the owner can oversee those accountable for particular areas. And, your team members will know who to ask for what. such as which staff member should speak with a particular client. Designated office responsibilities with clearly defined goals and expectations decrease stress and increase professionalism.

If your A/R balance is less than one half of your monthly production, your financial policies may be too firm and staff may be unintentionally running clients off. On the other hand, fbr your established customers of record, you might consider flexibility in payment if the client has demonstrated a good history. If you do offer financial options, however. do not extend them fbr more than three months and have a re-bill policy, or intbrm the client of interest due atter or during thc threemonth period. Also, verify the crcdit history of the client prior tcl advancin-g credit.

Check with your state law regarding intcrcst re-rulations and prcsent it written policy to thc customer.

. Do yc'ru have old accounts on your A/R that have been turned over for collection'J Adjust these off so you have a true A/R that is collectable. E,nter the adjusted amount into the client's record and keep a separate ledger file for this activity. Check with your accountant and clean up your Accounts Receivable report.

Develop yonr financiul gttidelines : Sit down with your team and write out your office financial guidelines. The collection of money owed is the responsibility of the entire team. Once thc entire team creates thc guidelines. the owner needs to approve and stand behind them. Have you cvcr noticed that thc client will tr) to go around thc staff person and ask lbr a discount'l Or ask if they can pay "over time" instcad of paying as the service is completed'?

As an owner or manager. you will undermine the clicnt's trust and respect of your staff if you allow even one customer to do this. One kindhearted business owner said. "There's no 'end run' involvedl I just plow right through my front office team and give the discount up front to the customer, and I know I'm the problem!"

Discuss the philosophy of your business with your team. Each office is different. If you feel compelled to give a courtesy, consider a limited discount amount rather than a discounted percentage.

. It is advisable to craft a "change of policy letter" regarding your position on cash courtesies or changes in your office's financial policy. The worst thing you can do is surprise the customerl Remernber that a surprised customer is an angry customer. Do allow the prior courtesy level and let the client know, in a friendly, warm manner. why you've had a change in policy. And then the new courtesy level would apply for all future procedures or services.

. Owners or managers: Reinforce the efforts of your office team. If an old fiiend asks for a courtesy, let him know that your staff will handle all the financials for the two of you. If the owncr shoots down the financial coordinator, she may not want to enfbrce the policy again! Owners who make arrangements contrary to office policy create strcss for their staff and Lrltirnatcly can creatc spoiled clients who will continue to go around the staff. Spoiled clients are created by nice. caring owners who want to bend over backwards for their clients, especially early in the relationship. These clients becomc quite demanding and are often rude to the office team, dictating when they'll come in, when they'll pay, and how much they'll payl

C rite ria .f'or.finan cial optio rts: The client is prepared in advance regarding their responsibilities with payment.

. The fiont of1ice tcam's responsibility is to say. "Will that bc cash, chcck or bank card']" ll the work or service is extcnsive. consider breaking thc client's portion into three segments. with onc-third

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Bosed in Annopolis, MD, Fletcher Wood Solutionso is the lorgest monufocturer of defect-free, oppecronce grode rodioto pine products in New Zeolond. Distributing our cleor boords, mouldings, LIFESPANo treoted wood, ond lumber to the North Americon morket through our proven ond completely integroted supply choin, Fletcher Wood Solutions@ mointoins direct occess to one of the lorgest FSC certified@ pine plontction forests in the world.

By Christopher Eckrich