How to Collect from Anyone (Even Enron)

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29. Follow the money.
You're in payment discussions with a CEO. You're thinking that you've finally knifed through the red tape and made your way to the person who has the authority to pay you. Don't be fooled. Sometimes even CEOs have little choice about where their company's money goes. Some CEOs, for example, face dire financial consequences if they don't periodically pay down their credit line. Other CEOs don't even call the shots -- they might be indentured to a group of equity investors with a majority share of the company. That scenario is especially common if you deal with high-tech start-ups. In either situation, include the company's powerful financial entities in your collection efforts. For instance, let's say that the contact person at your customer's company breaks a promise to you. When you follow up with that person by E-mail, "cc" not only the contact's supervisor or CEO but also the company's banker or investors. If taking that step seems severe, then don't do it -- but you can certainly threaten to do it at a later date if the customer continues to break its commitments.

30. Be enterprising and relentless.
We'll conclude with another tale from Tracy Wald's adventures in collecting. Wald has actually gone so far as to look up home numbers in the phone book and contact delinquent payers at home. He says he's called at "ridiculous hours" of the day. "Those are measures of last resort," he warns. "But it's not unreasonable to expect to be paid if you met their commitments."

Ilan Mochari is a staff writer at Inc.

The Collectors

Emotional intelligence. Communications savvy. Tenacity. A touch of ruthlessness, coupled with compassion. All are required traits for anyone who is negotiating a successful collection process. The members of our panel of veteran collectors have all those traits and then some.

Nettie Morrison has been an accounts-receivable specialist for Foresight for 5 years. Foresight is a 50-employee software developer based in Dublin, Ohio.

Rolf Albers has been at the helm of Albers Manufacturing Co., a $12-million electronics-manufacturing company in O'Fallon, Mo., for 23 years.

Tracy Wald is CFO of Leonhardt Fitch, a $10-million branding consultancy in Seattle. He's held that position for 10 years.

Richard Larkin is CEO of Larkin Enterprises Inc., a $70-million staffing and construction company in Bangor, Maine. Larkin collected his own receivables for 7 years before turning the job over to his CFO.

Cullen G. Williams has been the CFO of Larkin Enterprises Inc. for the past year. He has had more than 10 years of experience doing collections.

Rich Kadet is a management consultant at the Brenner Group Inc., a CFO-for-hire company in the San Francisco Bay area. He has worked in the financial field for 24 years.

And Before You Even Begin

You might think that some companies have all the luck -- those that deal with healthy, cash-rich customers like Microsoft, for example. Surely it's no trouble to get those customers to pay up.

Think again. And listen to an important piece of advice from Tracy Wald, who has counted Microsoft as a client for the past 15 years, the last 10 during his tenure as chief financial officer with Leonhardt Fitch.

The good news is that Microsoft is not only rich but also well organized. Leonhardt Fitch enters its invoices directly into Microsoft's computer system through a secure Web server. The system routes the invoice by E-mail to whichever manager in Redmond has approval authority. A manager signs off on the invoice, and Leonhardt Fitch gets paid on time. "Their system does everything electronically," says Wald. "It always pays at least one day before the bill is due."

And the bad news? Simple as the process sounds, it can get started only if Wald has secured a purchase order for each project. But getting a P.O. isn't always easy. Wald recommends using the same diligence you would in pursuing an overdue bill: Call proactively, record the conversation, and exact a commitment from whomever you talk to about when you can expect to receive your P.O. If you don't receive a P.O. on that date, call to follow up.

Why is getting a P.O. so tough? Wald attributes it to Microsoft's entrepreneurial culture, which gives project managers tons of tasks to complete, so accounting procedures are low priority. "Giving out P.O. numbers isn't really an important part of their job," says Wald. "So you have to impress upon them that, no matter what, you're not going to go away."

Please E-mail your comments to editors@inc.com.

Check out "Collection Slip-Ups" to discover what not to do when collecting from clients.

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