Top Strategy for Avoiding Customer Late Pay
A petroleum company’s cash flow health is typically tied directly to customers paying invoices on time. Late paying customers quickly bleed away already slim margins and profits, in addition to adding significant operating costs by monopolizing staff time and efforts. The absolute best way to avoid these costly scenarios is to enroll customers in electronic payment. Taking the initial payment action steps from a choice to a system delivers timely payments, less staff headaches, and a much healthier accounts receivable aging.
With the benefits of electronic payments so huge, why do so many companies struggle with both setting up new customers and converting old customers to this modern payment structure? You must look internally to get the answer. The biggest reason is because staff, from sales to credit department to customer service, frequently don’t know how to sell the concept as what it actually is, which is very customer-friendly.
Educating your employees on the benefits, and how to convey those benefits to customers, is a worthwhile project, especially given 2020 business conditions. Now more than ever, customers are open and available to embracing new technologies that are lower-touch and accommodating to their own struggle operating businesses with fewer employees on site.
Let’s take the top 5 most common objections to setting up EFT payment, along with helpful comebacks:
- Customer doesn’t want to give open access to their bank account – “we absolutely don’t have open access to your bank account, and will be drafting ONLY what is due, when it is due per the terms we just agreed on. We will even give you a heads up prior to the electronic draft and you let me know if there is a problem or ”
- Customer doesn’t want to reveal sensitive banking information – “we only need the information displayed right on the front of your check, nothing beyond that”
- Customer doesn’t believe it’s safe technology – “do you use direct deposit for banking needs? It’s the exact same technology, just reverse and much more safe and secure than putting a check in the mail.”
- Customer would rather make payments the way they always have – “our company believes in investing in the best technology to safely deliver our product to you, and electronic payment is efficient, safe, secure, paperless, GREEN ”
- Customer is managing their accounts payable and will pay invoices when convenient – “no good response!”
It’s important to keep in mind that converting established customers to EFT is a project, not an overnight event. Take advantage of customers’ requests for special services or favors, and ask them to automate payment in return. Offer to forgive late fees when a past due customer agrees to enroll in EFT. When a cardlock customer is cut off at the pump because of an invoicing problem, it’s a great time to suggest EFT, which will avoid future problems.
A terrific initiative for the last quarter of 2020 would be to set goals for customer EFT conversion, with the end result of a much healthier cash flow, less interruptive problems for staff to chase, and additional benefits to customers by eliminating late fees, interest charges and billing confusion.
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