business

Your business cannot thrive if you don’t have continuous cash flow – and you can’t have continuous cash flow if your AR is a mess. Improving your accounts receivable collection process is not just a bit of simple advice: it’s mandatory.

If you don’t have a handle on your Accounts Receivable collection process, then more and more clients are going to be willing to pay late (or not at all) due to a lack of consequences. So, here are 9 tips on improving your AR collection process:

11. Prioritize Collectability

The methodology of enhancing collections by focusing on clients more likely to pay, as opposed to treating all accounts receivable equally, entails a strategic and targeted approach to financial management. This method prioritizes clients based on their payment history and creditworthiness, concentrating efforts on those with a higher likelihood of timely payment. Periodically check changes in their credit scores, higher the credit score better the chances are to get paid. By doing so, it enables more efficient allocation of resources, such as manpower and time, towards these promising accounts. This approach not only optimizes the collection process by increasing the probability of successful recoveries but also helps in maintaining better relationships with reliable clients. It’s a data-driven strategy that allows for a more effective management of cash flow and reduces the effort wasted on chasing less promising debts.

10. Are your Invoices even Reaching your Debtors?

The methodology of improving collections through regular skip tracing every three months is designed to enhance the effectiveness of debt recovery efforts. By frequently updating debtor information, businesses ensure that their communication — phone calls, emails, and reminder invoices — are directed to the correct addresses, thus reducing the chances of missed or ignored reminders. Additionally, monitoring the status of the company’s phone number to ensure it is not marked as spam, and using alternate numbers if necessary, helps maintain open lines of communication. This method also includes a pragmatic approach to debt settlement, where businesses are open to negotiating and accepting lower amounts than what is owed. This tactic can be beneficial in situations where recovering a partial amount is more feasible and cost-effective than pursuing the full debt, ultimately helping in cutting losses and improving cash flow.

9. Create An Aging Report

A simple solution to start monitoring your AR is to create an aging report. Your aging report should contain:

• Your client’s full name
• Your client’s contact information (address, phone number, and email)
• When each invoice was last issued (30 days, 60 days, 90 days, and so on)
• Your client’s past due balance

Your or someone under your employment should be assigned the task to update these aging reports on a regular basis. This will come in handy when it comes time to start sending out collections emails. It will also act as an easy way to prioritize which clients need to be contacted first.

8. Automate Your Collections Email

Once you have an aging report, you need to set up a collections email. CRM’s such as Mailchimp offer easy to use automation systems that can help you set up these emails.

Start by creating a template. Then set up a variety of “Audiences” to send out to your clients depending on their aging report. You can export your list of 30-day clients, 60-day, and so on directly into your CRM system.

Once you have your collections email template and audiences set up, you’re ready to go. Just schedule your emails to be sent out once or twice a month as friendly reminders.

You can also see how many times your client opens the email. This comes in handy because you’ll know who actually read the email. If they’re still not making payments, it’s time to get on the phone.

7. Offer Discounts and Payment Plans

Offer instant payment option while you are on the phone: Over the phone, Paypal, Online Credit Card link etc. Otherwise, many debtors may change mind once the call ends and getting hold of them next time could be a huge challange.

Most people prefer payment plan options – especially when it comes to high price debt. Offering payment plans is a great strategy for improving the accounts receivable collection process.

Depending on your own current cash flow, determine the length of the payment plan and how much interest to include. Then be sure to update your aging report and add in a new template in your collection email CRM.

For clients who are able to pay off their debt, offering discounts is an excellent way to provide some incentive. Consider calling clients with low payments and offering them a discounted price if they pay off the debt in full.

One of the great ways to offer discount, yet collect your principal amount in full is to impose a late fees and then wave it off in the invoice, show the late fees wavier on the bill.

6. Diversify Your Clients

The great thing about owning your own business is that you can to determine who your clients are.

With that in mind, you may want to consider diversifying your clients. If you only stick with low to middle-class clientele, you are more at risk of receiving late payments. The same can be said if you have clients who are prone to let their AR balances grow stale or have a spotty credit history.

If you have a few clients who are in the top 10%, you can use their regular payments to balance out the unpaid clients. At least for now. You can use a credit application system to better understand the types of clients you are working with. 

5. Diversify Your Payment Options

Along with a variety of payment plans and customers, you should also install payment options. This should be a staple if you plan on improving the accounts receivable collection process.

Any time you buy online or in-person— whether it’s a shop, a restaurant or a service— you have payment options. If you only offer the ability for your customers to pay by debit or checks, you will limit your AR response rate. Instead, make sure you have various options so that your customers will be more readily available to make a payment.

The only thing we really recommend is that you don’t accept physical checks. This gives your clients room to stall on their payments, which is the opposite of what you’re trying to do.

4. Eliminate Customer Obstacles

Another reason your clients may not be making payments is because of obstacles in their way. Do your collection emails get sent to their spam folder? Is your website fully embedded with SSL, and does it work on both desktop and mobile?

Ensuring that your clients don’t meet any technical issues in their payment methods will help improve your AR. It’s worth it to hire a tech company to ensure there are no obstacles in your customers’ way that prevent them from making an easy payment.

3. Move Fast

When it comes to making payments, clients tend to wait as long as they can. That’s why it’s vital that you have systems in place that act fast. This includes your automated email reminders, but it also means having deadline strategies.

For example, you should send in payment reminders before the client’s balance is formerly due. If you don’t move quickly to get your client’s account paid, they will know that they can take their time in paying you back.

2. Maintain Your Relationships

Above all else, maintaining a healthy relationship with your clients is the best method for securing payments. Make sure your employees have a script at hand for talking to clients to maintain a professional manner. It’s also vital to still treat your clients as customers… even if they are a little behind.

1. Hire a Collection Agency for Accounts over 90 days

Accounts which are over 90 days past due and have still not paid despite of your internal collection efforts, then it hay be a high time to hire a debt Collection Agency. Benefits of hiring a collection agency are beyond the scope of this article, but they have been recovering money for clients for decades. They do things very differently than your in-house employees would ever do.

If you are looking for a Collection Agency to improve your Accounts Receivable Collection process: Contact us

Accounts receivable refers generally to money a business is owed for products or services that have been delivered or provided to customers. It is a crucial part of operations for many businesses, due to custom or routine in certain industries, where requiring immediate payment on delivery is unnecessary or could cause delays that strain a customer’s ability to run its business. If, however, the amount due increases to a figure that is unsustainable for the business that is owed, it can cause serious cash flow problems and ultimately impacts its profit.

Understanding how accounts receivable fits into your business is a basic, but important component of success, especially for smaller businesses or those that might not have excess cash to fund obligations while waiting for payment in full. Here are some key concepts relating to accounts receivable, and how they impact businesses.

Understanding the basics of accounts receivables

Some businesses might typically have low to zero in receivables, such as a restaurant where customers pay in full at the conclusion of their meals. In simplified accounting terms, these are cash basis transactions and represent the way most modern personal transactions transpire – a customer wants to purchase something so they pay cash upon delivery. This payment doesn’t necessarily have to be made in physical cash to be “cash basis,” as a check, credit or debit card transaction is, for the most part, the same as cash for a receiving business.

Often, however, business-to-business or B2B sales requires flexibility. Let’s stick with the dining example, but focus on the relationship between a food-service supplier and a restaurant. It is common for suppliers to have arrangements with the various accounts they service to enable quick and efficient delivery, with payment of the amount due not required upon delivery, but instead at some later date. 30 days is a common term for these transactions, which are called “on account” instead of on a cash basis. In this example, the supplier makes the delivery with the understanding that the restaurant will pay its bill in full within 30 days.

Why businesses permit “on account” transactions

At first glance, you might wonder why a business would give goods or services to a buyer without obtaining immediate payment. The restaurant supplier example illustrates a particular industry custom and the reality that many businesses might not have employees walking around with checks at the ready. Also, accounts receivable are more common in businesses that provide services. A business lawyer, for example, might provide advice or review contracts for another business and submit a bill when the legal matter is complete, or periodically, such as with a monthly invoice.

While we introduced the concept of accounts receivable with a B2B example, consumer transactions can involve accounts receivable too. Take, for instance, a lawn mowing service. It’s common practice for a landscaping company to provide service to customers when they are not home. Requiring immediate payment can cause many complications — the landscaper would either have to arrange to be paid in advance or mow the lawns only while the customer is home. The common thread between the B2B and consumer examples is the existence of an ongoing relationship between the parties.

We should not confuse cash flow with profit. Profit refers to the amount of money left after expenses, cash flow indicates the net flow of cash into and out of a business.

Avoiding out-of-control accounts receivable

While providing goods and services on account for both B2B and consumer transactions  It’s easy to see how accounts receivable can get out of hand if not managed properly. Accounts receivable are recorded as assets for accounting purposes. They are like cash but not as liquid, so they only positively affect cash flow when the account receivable is cleared through payment. Businesses must balance the sales and service value of catering to clients’ desire to pay on account with maintaining healthy cash flow for their business. There are several ways for a business to walk this line.

• Protect your business from lean times. The first is having sufficient cash reserves to support your business model, including the delayed payments from your industry’s standard accounts receivable practices. If the standard is a 30-day window, you must have enough positive cash flow to support operations and restocking new inventory without immediate payment. This is one of the main reasons under-capitalized businesses fail.
• If the sale is on credit, get the interest you are due. The next way to control accounts receivable is understanding the difference between “on account” and “on credit.” While the two terms may often be used interchangeably, “on credit” refers to the existence of a promissory note between the parties, and is used when a longer period than the standard “on account” period is necessary. If a customer needs more than 30 days, for example, you should protect their legal and financial interests with a promissory note, where a longer term is allowed in consideration for interest. Interest payments compensate for the delayed cash from a sale or transaction.
• Underwrite your customers. A final method is to know your customers. Understand the pressures in their industry, and get a sense of their cash flow. Although you are not technically a lender when allowing customers to order on account, you can underwrite the ability to pay and better protect your business from late payments and potential loss of profit for nonpayment. This underwriting process should involve discussing fluctuations and keep you out of the dark when it comes to a customer’s potential cash flow problems. The information obtained will inform your accounts receivable policies such as the amount you will allow on account and terms.
• Hire a Collection Agency. A customer who has not paid even after repeated reminders then – “there’s more to this than meets the eye”. There may be other businesses just like yours who are waiting to get paid. If someone has not paid for 90 days, then they will possibly not clear your accounts receivable easily and their financial situation is likely deteriorating with every passing day. Time is of the essence, and taking help from debt collection experts can be quite beneficial. It is safe to start with low cost “Collection Letters” service provided by collection agencies and later switch to more intensive collections service if required. 

In an ideal world, businesses would be paid immediately upon delivery, but this does not reflect the reality of doing business in many industries. With some understanding and a few tips, your business can keep cash flow positive and the likelihood of profit greater by leveraging accounts receivable as a tool to facilitate a strong, long-term relationship with your customers.

If you are looking to hire a debt Collection Agency to recover money from your past due accounts: Contact Us 

 

 

When you are operating a contracting business, some clients will occasionally refuse to pay their outstanding balance. Do you really have time to become a part-time debt collector?

Despite your best efforts to recoup your money, your final option may be to hire a collection agency to recover from these delinquent customers. 

Serving Contractors Nationwide Need a Collection Agency for contractors? Contact Us

The question is, when do you know that it’s time to make that call?

We suggest that once an account is over 60-90 days its time to hire a good collection agency with extensive experience in your industry.

All contractual businesses should have a well-defined accounts receivable strategy. Before providing service to a client, you must ensure that your contract with customers is legally binding and specifies the consequences of not paying. It should allow you also to add check bounce fees and late fees.

Each signed agreement, even communications such as emails, can hold your client responsible for paying for your service. Whether they aren’t happy with the service or they don’t have the funds to pay you, here are obvious signs you need to hire a collection agency to help you recover your money.

1. Your Client Is Stalling

Clients who want to appear as if they have intentions to pay off their debt will use stalling tactics. These clients will repeatedly miss payment deadlines, write bad checks, or continuously dodge your phone calls and all sorts of excuses. Once this starts happening every week, hiring a collection agency should be your next step.

Some people may go as far as to make a formal complaint against your business. Whether this is done on a more low-level service such as Yelp or Google reviews, or they file a formal complaint against the Better Business Bureau (BBB), even though you know that your work was executed just fine. Clearly your client has decided to take an unprofessional route and at this point, it’s obvious they aren’t trying to pay you.

2. You Can’t Locate Your Client

Initially, your client may make empty promises to pay their outstanding balance. They may do this by actively answering your phone calls. But once it’s evident that these tactics won’t deter your hunt from recovering their past due accounts, they may disappear altogether.

If your client blocks your phone number, changes their email, or seemingly vanishes from social media, it’s time to hire a collection agency. An agency will have the resources needed to track down your delinquent clients so you aren’t wasting more time.

3. You Don’t Have Time and Expertise To Recover Past Due Accounts

The amount of time and energy it takes to persuade people to pay you is exhausting. It will take you emailing, calling, and sending formal letters on a routine basis. If you have a staff that manages these types of calls, that is daily manpower and employee pay that you must manage to recover past due accounts.  And once a client has decided to block you from all forms of communication, it can be hard to track them down.

A collection agency (especially the more reputable ones) has the proper tools to track people, send collection letters, make collection calls, and even take them to court if needed. They will take that time off your hands, and you can rest assured that someone is acting on your behalf to pay off your contract. Remember that most agencies will take a portion of the debt owed for their services, but this is usually worth it in exchange for their rigorous efforts.

RELATED: Small Business Collection Agency: Debt Recovery

4. You Have Pending Bills For Your Own Contracting Business

When someone neglects to pay their balances, it puts a financial burden on your business and restricts your own cash flow. If you have your own outstanding payments that need to be paid on time, you may want to hire a collection agency as soon as possible. Even if you are not reliant on your customers paying on time, you never know when you might need the extra cash.

Instead of putting yourself at the mercy of your clients, an expert collection agency will be your best shot to get those payments started. Being sent to a collection agency will take a toll on your client’s credit, making them more inclined to start making payments.

5. You Can’t Afford Legal Representation or Don’t Have Time

Some contracting businesses instantly put out the threat of legal action once a client refuses or dodges their bill. While this route also works to recover past-due accounts, paying an attorney takes time and upfront costs. Instead of going this route, you can indulge in the help of a debt collector.

Some agencies work on a contingency basis, while others require a flat fee. You may want to consider using an agency over a lawyer if you don’t have a tangible contract with your client or if your client has moved. Agencies may have access to other databases that allow them to trace where your client relocated to (known as skip tracing). Do your research to see which option is the more viable and affordable for your contracting business.

So if you are a Small business owner,  Electrician, Plumber, Heating and Ductwork, Drywaller, Painter, Finish Carpenter, Tree Cutter, Mason, Roofer, Excavator, Landscaper, Cabinet maker, Fabricator, Architect and Interior design consultant; contact us to recover your unpaid bills.

RELATED ARTICLE: Will a Collection Agency Ruin My Business Relationship? 

Adequate working capital is critical for businesses of any size but, it is doubly so for small businesses and start-ups. Working capital represents a business’s ability to pay its short-term expenses. It’s a measure of cash flow and is computed by subtracting the company’s current liabilities from its current assets.

When a business has negative working capital — meaning that its current liabilities outstrip its current assets, there’s a chance that current expenses could overwhelm the business’s ability to settle them. For a small business that depends on healthy relationships with their vendors and debt partners, this can be a serious problem. Here are six reasons why it’s so important.

Working Capital Is Crucial for Day-To-Day Company Operations

Small businesses generally have both short-term and long-term financial obligations. The short-term obligations, those involved in maintaining proper inventory levels, paying vendors, employee salaries, and the myriad other expenses that factor into the day-to-day operations of the company must be kept current in order to maintain smooth business operations.

When a business falls behind on its current obligations they risk interruptions to their supply chain, employee churn, and a loss of critical vendor relationships. This makes it more difficult to satisfy customer demand adequately, which can lead to angry customers, stress and a loss of income, further decreasing working capital.

If this spiral is allowed to get out of hand, financial insolvency is likely, as day-to-day operations are no longer supportable. Having sufficient working capital is the best way to prevent this sort of negative result.

Small Businesses May Not Have Access to Financial Markets

When large businesses are faced with working capital shortfalls they can borrow money under attractive terms to help settle short term expenses or convert short-term debt into long-term debt.

Many small businesses don’t have the credit history, or the assets required to qualify for this sort of financing, at least not at interest rates that the business can afford. Because they lack this safety net, small businesses must keep a keen eye on their working capital to be certain their current expenses can be satisfied.

Proper, consistent management of working capital can have a secondary benefit, however. When a business is a good steward of current assets versus liabilities, paying all expenses, particularly its debt service payments, on time month after month it builds corporate credit, and can, in the long run, open up credit markets for help in the future.

Businesses Have Access to Better Purchase Options from Vendors

Businesses that have proper working capital and satisfy their liabilities on time will qualify for better terms from their vendors. This often translates to smaller purchase minimums, lower short-term financing rates, and better bulk pricing.

Better vendor terms allow for more effective inventory management practices, which further enhances working capital, setting up a positive feedback loop.

Businesses Are More Resilient Against Unexpected Shocks

If a business is already struggling with debt service or is having trouble satisfying other short-term obligations because of inadequate working capital levels, unexpected expenses or sudden reductions in income can have devastating results.

These shocks are much easier to weather when the business has the resources necessary to cover its normal expenses. It then only needs to worry about the new circumstances.

Competitive Advantages are Possible

Solid companies with proper working capital levels will operate more efficiently than less stable companies. They’ll have better-developed supply chains, preferred financing terms, and a more resilient production process.

This creates savings that can be passed on to the customer. Better prices at similar quality levels undercut the competition and represent a significant competitive advantage.

Working Capital Allows a Small Business to Grow

Having enough working capital to satisfy current obligations is critical, but just as important is what a company does with excess working capital. Maintaining levels in excess of what it takes to maintain day-to-day operations precludes a business from making the investments required to grow. To use working capital efficiently, overages should be invested back into the company.

Excess working capital allows a business to scale its operations, investing in new equipment, new lines of business, extra staff and other positive business investments. Growth is important for the long term health of the organization as it increases future opportunities and makes the company more valuable. It’s also a key factor in assuring financial stability in the face of long-term financial obligations.

Working Capital Is a Signal to Investors

While adequate levels signal that a business is able to satisfy its current expenses, it’s not a guarantee. However, many investors still use it as a signal for financial stability because it’s a generally strong indicator of financial health. If a business wants to appear healthy and be healthy, it should make certain to keep proper working capital levels.

Using a debt collection agency is crucial to recover those unpaid bills. Hire a Collection Agency for a better cash-flow.

It isn’t uncommon for patients or clients to sue. Unjust as their claims may be, a litigious client will throw out the word “sue” as much as they are willing to write an online review. According to Rocket Lawyer, the chances of a small business owner getting sued is pretty high with over 100 million cases being filed every year.  

Some business owners are under the assumption that a client who threatens them with legal action is just using it as a scare tactic or out of anger. After all, isn’t consulting a lawyer going to cost them more time and money than they can’t afford?

This is one of the more common misconceptions. A good deal of personal injury and other types of lawyers work on a contingency fee basis if they believe their client has a high chance of winning the case. This makes legal actions all the more attainable, even for those who are financially strapped. And statistically speaking, your more affluent clients are the ones you should be concerned with, anyway.

Because small business owners hold immense liability (no matter their practice), it is vital that you learn the signs of a potential litigious patient or client. It’s also practical to know the positive steps to take in order to stop someone from suing you and the overall appropriate method on how to handle a litigious patient. One wrong move can land you in a lawsuit that can cost you upwards of $100,000, according to the Court Statistics Project.

Here is some useful intel on how to spot a litigious client or risky patient.

Common Litigious Clients or Patients

The good news is, when it comes to clients who are likely to sue, you can usually see the writing on the wall. These people are typically troublesome from the beginning so that you know to start protecting yourself early on or you can dismantle the collaboration altogether.

Here are a few signs that point to litigious patients or clients:

They have Sued in the Past: Some people/patients are habitual troublemakers. If someone has sued a business owner or a doctor in the past, they have already gone through the legal process once and are fairly comfortable in pursuing the legal path again against your business. Once you suspect a potential trouble maker, it may be wise to check him in the National Litigation or Civil Litigation database. Even entities like the debt collection agencies often do this check before trying to recover debt from a client to protect their clients and them self.

They’re Affluent: Educated people and those with high paying jobs are more likely to sue than your Average Joe or Jane. The reason for this is because they have the resources to expand on these situations, or simply because they feel the need to have care without qualms because of their stature.

 They’re Nit-Picky: Whether you are a doctor, a lawyer, a dentist, or some type of contractor, a client who seems unwilling to compromise may end up causing you bigger problems later on. Chances are, these clients are unlikely to be fully satisfied, meaning they’ll ask for extra work outside the scope of your contract or they will try to get a refund of some sort. When this fails to work in their favor (owing to the legality of your contract), they might claim “lawyer” and try to get their money back by means of a court date.

 They’re Confrontational: Clients or patients that cause chaos in their wake are more likely to become litigious. According to Alston & Bird, some behavior of litigious people include:

• Complains about every aspect of their visit (forms, payments, long wait times, etc)
• Is demanding, rude, or hostile towards your staff members
• Challenges or criticizes your initial diagnosis with their own layperson research

Their Age and Healthcare History: In a study, it was reported that women ages 41-60 are the 39% more likely to file for a lawsuit. Those with an ongoing health history are also more likely to pull the trigger on court proceedings if they feel their service was not up to par.

Unrealistic Expectations: If the client has unreasonable expectations given the nature of the service, timeline, or budget, it could indicate a higher likelihood of disputes down the line.

High Turnover of Service Providers: If a client has changed service providers frequently without good reason, it could be a sign that they’re difficult to work with or that they have a tendency to get into disputes.

Non-compliance with Agreements: Clients who repeatedly fail to adhere to agreements or contracts, or who try to change the terms after they’ve been agreed upon, may be more likely to involve in legal disputes.

How To Stop Someone From Suing You

Several measures may be taken in order to prevent someone from suing you. Anticipating litigious patients or clients from the start should play a role in putting together your Standard Operating Procedures. That way, you aren’t worried about the potential for this to happen daily because you’ll know that you’re already covered.

Here are a few preemptive methods you can take to stop someone from suing you:

Keep Records of Everything: This includes emails, phone calls, and in-person visits. You will want to install security cameras in your office space and sign up for a voice recording system to “ensure quality assurance.” These methods simultaneously work to prove your case should you be sued by a disgruntled client. It’s also important to follow up any phone calls with an email (a.k.a a paper trail) with the basis of your conversation that asks your client to confirm what was discussed. 

Have an Arbitration Agreement: An ADR or an alternate dispute resolution is an agreement that states issues can only be resolved by means of an arbitrator. This disables the litigious person to seek legal action because they have already agreed in the contract to have resolutions made outside of court. In other words, having this clause in your contract makes clients give up their right to sue. An arbitrator will hear both sides of the issues to come to a binding decision. 

Have insurance: Get a small business malpractice insurance or a medical malpractice insurance which covers your legal expenses and also covers the amount that you may be held liable in case the judgement is pronounced against your business and a compensation/penalty needs to be paid.

Sign Up for an LLC: If you’re not already, consider having your business established as an LLC. A Limited Liability Company ensures that only your business will be sued instead of you personally. Without it, your personal finances and assets are at stake in the event that you lose your case.

Have a Collection Agency handle your Accounts Receivable: Good collection agencies are insured against such events and they also run a “Litigious Debtor” scrub on accounts assigned to them. 

How To Handle A Litigious Patient

If you haven’t already set up the aforementioned precautions, there are still measures you can take to handle a litigious patient. Here are a few methods on how you can handle a patient or client who seems like they may be aiming to sue:

Do Background Checks: If you have spotted any of the signs of a litigious client (affluent, confrontational, etc), you will probably want to do a background check on them before you proceed with your arrangement. Have they sued before? Have they made multiple claims against an insurance provider? Who have they previously worked with? This should be another preemptive measure, but knowing their history of complaints could help you out in the long run, if only to prove their tendency to seek compensation. 

Try To Resolve Their Issue: Generally speaking, litigious clients will be complainers. To combat their desire to take you to court, try to ease their concerns outright. You can assure them of your services with statements from other clients, encourage them to get a second opinion, or slowly walk them through your strategies to explain your methods. The key is to keep them at ease and have them trust you so they know you have their best interests at heart.

If these clients seem beyond retribution, it might be best to cut off the arrangement before things get ugly. 

Hire a Lawyer: And if worst comes to worst, hire a lawyer. Gather all documents and communications with this specific client to help your lawyer design your defense. As a business owner, it’s your job to take precautions, but it will be your lawyer’s job to find loopholes in your arrangement. If a litigious patient or client has served you, stop all communication with them until you have a lawyer on your team.

As a small business owner, you are probably aware that your customer satisfaction is a top priority when it comes to being successful. When you are first starting out as a business, this relationship might be easy to dictate because the customer pool starts off small. But as your business grows, it will become harder to facilitate your customer needs, goals, and overall interaction which means a steady decline in your customers view of your business.

Whether you own an online B2B operation or have a brick and mortar boutique shop, the communication between a customer and an employee is relevant to your success. A positive interaction increases the likelihood of them becoming a repeat customer, while a negative one will have them walking out the door and leaving a roaring online review.

The best way to ensure customer satisfaction is to implement a Customer Relationship Management system or CRM. CRM’s have become steadily popular amongst entrepreneurs, but it’s important to know your options. CRM software can be free or they can cost thousands of dollars. Some systems are better for B2C and others are excessively more difficult to navigate.

To give you get the full scope, here is everything small businesses need to know about Customer Relationship Management.

What Is Customer Relationship Management?

Customer Relationship Management (CRM) is a tool that helps manage all interactions your customer has with your business. There can (and should be) multiple CRM systems in place to organize all of these interactions, from online marketing to face-to-face encounters. The goal of CRMs is to help determine where customer service is thriving so that you can expand on those practices to enhance all customer experiences. Likewise, it also works as a tool that points out the flaws in your business-client communication so that you can learn to adjust when need be.

CRM’s can be used through various aspects of your business. Your sales team and your day-to-day employees will also need to be acquainted with this system. Your CRM will reveal your customer’s habits, including purchasing history, customer requests, and more. Knowing these statistics can increase sales by up to 29%, according to SalesForce. Which means that if you are proactive about familiarizing your company with these management gears, then you are already ten steps ahead of the competition for your small business.

CRM Strategies For Small Businesses

Now that you are aware of the undeniable benefits of a CRM, it is time to put this practice to work. Before you actually set up the software for your Customer Relationship Management, you need to formulate a strategy.

It is important to do this just like it was vital to write down your business plan before inquiring for a small business loan. It directly identifies your own goals and previous customer interactions so that you are intricately aware of the progress of your customer’s journey as well as the missteps. Here are just a few small strategies that you should consider before you start the process of managing and increasing your customer interaction.

Reevaluate Your Business Plan and Goals

You set up your small business because you believe that you have a product or service that satisfies a need. You are so confident in your process, in fact, that you believe your company provides something that your competition doesn’t. While this eager approach is admirable, it may leave your blindsided by your customer’s actual experience.

Reevaluate your business plan and goals to make sure these ideals are still being practiced in your current day-to-day. Identify your company slogan and values and make sure that you are still holding fast to your promises. Can you still claim to be the “Best BBQ in the North?” or can you still provide “The Fastest AC Installation”? If not, try reworking your plans and goals to fit realistic expectations so that your customers don’t walk away feeling robbed.

Identify Your Customer

One of the most practiced strategies for any small business is outlining the “ideal” customer. This is a customer identification chart that clarifies the specifics of what your typical customer might be like. Creating a customer persona will help in identifying their wants and needs so that you can better prep your CRM. This strategy is thorough, as you will need to designate your customer’s online behavior, their general lifestyle, their financial situation, education, location and more.

Set Up Interviews

Another way to retain a better grasp of your customer behavior is by setting up interviews. No one will know your client like your employees, so start by managing interviews with your employees to ask about their customer interactions. What do most customers look for? What questions do they ask? What are some positive and negative experiences you’ve encountered? How did the employee solve problems? And so on.

You can also implement interviews or surveys specifically for customers. Many companies, such as Dunkin Donuts, offer free products (in this case, a doughnut) in exchange for taking these surveys. This is when your customer can tell the business what they thought of their experience. It should also allow them to leave recommendations for improvement or highlight their positive interaction with your business.

Map the Customer Journey

This advice comes from Fit Small Business. Their suggested strategy to map the customer journey helps dictate who interacts with your company and where. This includes social media mentions, online reviews, paid ads, and more.

You can use a CRM to map out the customer’s journey to see what enticed them to come to your business in the first place. It will also show where they stop their journey instead of buying. If they went to your website through a paid ad but left at the landing page, you can surmise that the landing page didn’t sell them. Then you can rework the page to be more inviting until your CRM reflects that the page is working to drive higher sales.

CRM Software For Small Businesses

CRM software was initially marketed towards large corporations, but now there are CRM’s that are targeted specifically for small businesses. There is a lot of software to choose from, which can make it hard to determine which one will best suit your business needs.

In short, here are five CRM software that we recommend for small businesses:

Zoho CRM: Free-$35 per month
Nimble: $19-$25 per month
Salesforce: $25-$1,250 for small businesses
Sugar CRM: $45-$100 per month
Less Annoying CRM: $10 per user per month