Tips for good Customer Relationship Management
2.11.2006
Customer relationship management (CRM) is about finding, acquiring, and retaining customers and should be at the core of any customer-focused business strategy.
It enables the organisation to build and maintain connections with customers, partners, suppliers and other business resources.
Customer relationship management is also a major part of cash flow management as by fostering an effective CRM system, the time frame between receiving receipts of income and the initial expenditure can be reduced.
Cash flow problems can stem from simple poor business practices, including poor credit controls, failing to fulfill your order, inadequate supplier management, poor management accounting, inefficient ordering service and ineffective marketing.
Be aware of payment issues as they arise and act swiftly to reduce problems. The biggest problem for small business is poor cash flow. Sadly, it is a very common theme for those business clients who struggle with their cash flow to have very poor debtor management procedures.
There are numerous ways you can manage your customers better to limit these problems.
It is important to start by defining a credit policy that clearly sets out standard payment terms. From the outset, your customer needs to understand your credit terms, invoices need to be issued promptly and in the correct format and most importantly, you need to know who it is in your customers organisation that processes and authorises payment. This is necessary so that you can immediately begin the relationship by having the required conversation in and around prompt payment of your invoices.
Setting expectations early on is necessary so you know exactly when you want your bills to be paid. To facilitate your strict debtor management plan, implementing a procedure that prompts you automatically with reminder dates for your receivables process ensures you will stay on track.
An aged debtor list can be used to keep track of invoices that are overdue and help monitor your performance in getting paid. This means chasing debts immediately once they pass the due date. In fact, if your system of debtor management is effective, you should almost know before hand if you are going to have a problem.
Finally, consider outsourcing debt collection if debtor numbers or dollars are creeping up or if payments are getting slower. A change for the worse in client patterns of payments is often the most important sign. A worsening payment pattern is often more worrying than consistently slow payments. Therefore, responding to large debts immediately is essential as the larger the debt, the less likely you are to be paid.
It's in your customers' interests that you don't go out of business trying to meet their demands, so negotiate deposits or staged payments for large contracts.
If you are interested in improving your debtor management procedures, we can assist you. We have a very well defined debtor management procedure that could be implemented instantly into your business. We are happy to provide you this procedure template for free. Give us a call and we would be pleased to discuss this in further detail and set you on the road towards an improved cash flow management result for your business. Remember, "cash is king" in small business and the cash is better in your bank account than anyone else's!
To discuss how effective debtor management can help your business, or for a copy of our debtor management procedure, please call us on (08) 9328 1799.