If your events department is like most, you operate in many ways like an independent business, and cash flow is important. Consequently, being able to collect on past-due invoices is essential. Not surprisingly, the organizations that get the best results are those that use proven collections methods.
Put the Right Systems and Policies in Place
In order to effectively manage your “receivables,” you need to have systems in place for that purpose. For example, a meeting and event scheduling system like Mazévo accurately tracks all event-related fees and allows you to generate and track invoices easily.
You also need to have well-defined policies. Do you consider an invoice “overdue” and begin your outreach on the day after the due date? Or, do you allow for a week or two (or more) of “grace period?” Do you charge a late fee? If so, how much?
Whatever you choose to do is fine, but you need to explain your policies to everyone who uses your space for a fee and apply the same standard to all customers. Showing favoritism by giving preferred customers a little more leeway can get you into trouble.
Take These Steps to Improve Your Collections Rate
The following steps can help you collect more of the money owed to your organization. However, it’s important to note that there may be laws about collections practices in your area, and it’s critical that you understand them before contacting people about past-due balances and payments.
- Document your policies. Have customers review and sign your document to indicate they understand the policies.
- Send one or more reminders. Contact meeting hosts at predetermined intervals after you send an invoice to remind them about the upcoming payment due date.
- Find the right balance of firm and flexible in your collections efforts. In cases where some unavoidable circumstance has made on-time payment impossible for a customer, it’s acceptable to modify your terms. But that should be the exception, not the rule. If word gets around that you give an “extension” to anyone who asks for it, you can be sure more people will ask for it!
- Use progressively more direct communications. Most organizations start by sending an email notification about late payments. Then, they may send one or more text messages, and ultimately make phone calls. The language you use should also escalate from “friendly reminder” verbiage to more clear and concise statements.
- Avoid talk of lawyers, etc. Moving from requests to communications that feel more like “threats” to customers is rarely productive. Plus, you don’t want to do anything that could be characterized as “harassing.” You may ultimately have to turn an account over to a collection agency, but emphasizing that possibility in advance will likely alienate the customer.
Another strategy you can use to reduce your losses is to require a percentage or even full payment in advance for events.
Establishing a Collections Rhythm
Nobody likes doing collections work. But one way to make it less unpleasant is to establish a rhythm and set aside time for sending the emails and making the calls. Then you simply know that every other Thursday from 1-4 p.m. (or whatever frequency and amount of time is required) will be spent contacting customers. And, of course, the time and effort you put into collections pays off in the form of the funds you bring in and how that money can be used to improve your operations.
