Over the last three years, Professional Resources (Overland Park, Kansas) has averaged 20% to 40% revenue growth each year. "The lending environment doesn't permit this kind of growth, so cash flow has been vital to our growth," reports Mike Watts, vice president and co-owner. "We could not have grown this fast without getting our money turned quickly."

One of the most important keys to keeping DSO low is developing and maintaining positive relationships with accounts payable (A/P) clerks. Granted, there are very few A/P clerks who are out to intentionally harm you.

However, even a neutral attitude toward paying you, it can hurt. "Invoices can sit in baskets for weeks," he notes. "Or they'll wait until after the A/P clerks return from vacation."

Editor's Note: This article originally appeared in the Credit & Collection Manager's Letter, which Credit Today purchased in 2006.

To shift neutral attitudes to positive ones, Watts extends the company's service philosophy. "We treat clients, employees, and A/P clerks with respect."

This can be a breath of fresh air for clerks who usually get calls from people demanding payments.

Here's Watts approach:

• Billing new customers. Watts places a call to the A/P clerk and does the following:
  • Introduces himself
  • Gets to know a bit about the clerk.
  • Verifies information accuracy - that the invoice was sent to the proper address, etc.
  • Makes sure the invoice is "customer friendly" - that it has all the necessary information and meets their requirements.

• Tracking payments. Watts keeps meticulous track of how long, on average, each customer pays. This tells him when to place his first collection call.

• Placing calls. With first calls on a invoice, he opens the conversation on a friendly note, saying something like: I'm just trying to do some cash forecasting. Could you check an invoice for me?

  Since Watts already knows the clerks, the conversations are usually cooperative, and he receives payment shortly. If the A/P clerk can't find the invoice, Watts faxes a duplicate to get the process moving.

• Monthly calls. Watts calls most A/P clerks once a month, even if there aren't payment problems. "I engage in small talk," he says. "I get to know them better, learn about their families, and make sure we're still sending invoices the right way." These calls help him stay abreast of changes in organizations (departmental turnover, etc.) which might affect invoice processing. "But, the main purpose is to have them hear my voice and remember who I am."

• Personal visits. Watts' visits with A/P clerks whenever possible. When making sales calls, he usually takes time to introduce himself to the A/P clerks - or re-establish the acquaintances. "It's nice for both of us to be able to put a face to a voice," he explains.

  Watts also takes the time to meet other individuals involved in the payment process. "If an A/P clerk is ill or on vacation, it's good to know back-up people."

Additional touches help
To solidify relationships even further, Watts does the following:

• Sends handwritten "thank you" notes to A/P clerks who have made an extra effort for him.

• Sends Christmas cards.

While the industry average DSO is 42 days, Professional Resources' average DSO is 28 days. "Our customers pay anywhere from 7 to 32 days," he concludes. Clearly, this personal touch really pays!

Editor's Note: The above article originally appeared in the Credit & Collection Manager's Letter, a newsletter purchased by Credit Today in 2006. This article originally appeared prior to 2000.

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