One company develops relationships with customers' payables clerks to speed up receivable collections.
Unlike many entrepreneurs, Mike Watts, co-owner and vice-president of Professional Resources, a data-processing-services company based in Overland Park, Kans., is heavily involved with his company's collection efforts. "We recognized from the beginning that if we didn't collect our receivables even faster, revenue growth wouldn't be worth anything,' he says.
Watts's collection strategy is quite unusual, since it rests not on high-pressure techniques but on getting to know the accounts-payable clerk who is responsible for handling Professional Resources' invoices for each client. Whenever his company sends out an invoice, Watts follows up himself by telephoning the recipient's payables clerk.
"I explain that I want to make certain they're happy with our service and that our invoice is clear to them. While I'm on the phone, I'll try to get to know them a little bit -- after all, they're people too, with families, hobbies, weekend plans. Once every month or so, I'll call to check in with them. I sometimes even follow up with a visit. Very few vendors ever take the time to do this, but people really appreciate it.'
Results have been impressive: a typical invoice from Professional Resources takes 24 days to collect; compare that with the national average of 42 days sales outstanding. Best of all, reports Watts, no one has ever taken advantage of his friendly demeanor to slow down a bill payment. "Because we've got a rapport, they understand our financial needs.'