Strategies for Partnering With Your Customers' Payment Processors
Five Principals and a Key Tip From an In-the-Trenches Veteran The difference between getting paid promptly versus 10 or 20 days late may not be liquidity problems or intentional holdups. Instead, it's often bottlenecks and fumbles within the customer's payment processing system. We recently spoke with Raeann Smith, who at the time was senior credit analyst with LaCrosse Footwear, Inc., in Portland, OR about her strategy of working closely with those responsible for processing payments at her top 10 customers. We were impressed with her strategy of diving right in to work closely with those responsible for processing payment to LaCrosse. A successful strategy requires, first, a good blueprint, and second, diligence to continuously follow through. Hers' certainly had both. Here are the key elements of Smith's strategy:
- Meet With the Decision-Makers
First, she comes prepared and meets face-to-face with managers and other decision makers. Her goal is to resolve any policy issues, documentation problems, etc. that may be slowing down payments. - Meet With Those Actually Processing the Invoices
Then, she meets with all personnel processing her invoices, from the mailroom through AP. She observes how they handle your invoices. She tries to get to know them personally, and gets their contact information. - Stay on Top of the Situation With Agings
Her next step is to run regular agings, weekly if necessary, and send them to the customer with inquiries as to when the invoices will be paid. - Engage in Immediate Follow-up
Smith calls her contacts the moment she detects any slowing to determine the problem and what the customer needs from her to solve it. - Always Get to the Root Cause of the Problem
Smith aims to not only get the immediate problem of an unpaid invoice taken care of, but also strives to solve the problem for good so it won't occur in the future. When solving a problem, Smith tries to avoid going to a manager who is two or three levels above the employee she's trying to reach about some holdup or problem. "You have the gal on the floor, then the supervisor, then the manager, then the controller, then the CFO," she notes. "Some creditors immediately go to the CFO and try to rattle his cage. That's not effective. You're just annoying everybody from the top down." We suspect that many in this environment won't have a budget for such activity. Certainly, it's got to be cost-justified and at LaCrosse, the dollars are high enough to make this work very well. But even if you have no budget for travel, it's still possible to institute such a thorough and effective strategy. Just create a checklist of what the payment process would look like (based on the above template), call the customer and start asking the questions. A phone call asking discovery questions can still get you the results that a face-to-face would do. By the way, we noted above that Smith was a senior credit analyst with LaCrosse Footwear at the time of the interview. She took the initial draft of our article about her and showed it to a new potential employer and they were so impressed they hired her on! To read the full details on Smith's extraordinary strategies, and to understand just how succesful this can be, click here: Partnering With Customers' Payment Processors ======= In response to our column last week, "10 Dos and Don't For Customer Visits," Harris Semegram, Director of Credit at Prestige Brands (Irvington, NY), was kind enough to offer a very important addition to the list: "If you and your team meet to debrief after a visit, say at a diner, pick one that's a few miles away from the customer's office. A nearby location may have some of your customer's employees sitting within earshot of your table." A very good point and we've already added that to our list. Thanks, Harris.
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