Get P.A.I.D. - A sure-fire system for reducing collection problems and increasing profits

By: Robert Bernstein, Esq.

The solution, outlined in Bernstein’s book, Get P.A.I.D., is a disciplined credit policy that views parity with your customer as a fundamental aspect of a healthy buyer/seller relationship. The Get P.A.I.D. system utilizes four specific steps to provide a continuous, proactive policy to help businesses better manage their customer credit.

Four Pillars of Parity

• Preparation The key to developing an effective credit policy is defining and preparing the tools necessary to clarify your policy.
• Assessment This step identifies the proper precautions you need to take to integrate credit information. Without an agreement in terms of expectations, customers have every motivation to be lax in their payment habits.
• Implementation Proactive, tactful engagement with the customer helps ensure compliance with the understandings. Specific tools such as invoices, statements and reminders can be expressions of value and play an important role in establishing discipline in payment.
• Defense Prompt and proactive response is necessary when the understandings are not fulfilled. Immediate action is required.

The crux of the credit policy is the Payment Gap which is the time between the delivery of a product or service and payment for that deliverable. The smaller the Payment Gap, the better. The wider the gap, the longer you wait to get paid. As the Payment Gap increases, the costs of collection and maintenance may eventually exceed any benefit that can be derived. This has to do with both the cost of credit and the impact collections have on the customer relationship. Outstanding debt (or outstanding sales) costs money, often much more than organizations realize.

Evaluating Your Own Policy: Causes of Bad Debt

Many, but certainly not all, slow or no payers are created by the way companies extend them credit. That’s good news. It’s better to fix a problem internally than to try to correct it in others. Four internal causes of easy credit can lead to unpaid customer balances:

• Unsupported Culture. The mother of all credit problems is a culture that assumes that slow or no pays are inevitable and a necessary business evil.
• Bad Management. Experiences like joining a civic club, going on a first date or paying a bill on time, often begins with a request. Managers who are afraid to ask for the money or who encourage timidity among staff members set the wrong tone for their department.
• Lack of Policy. A company’s mission statement outlines its purpose and vision. Related are general principles of action and behavior such as “We will endeavor to collect 90 percent of all accounts within 90 days,” or “We will diversify our customer base.” Policies go deeper, answering the critical question: Who does what, when, where and how?
• Lack of People Skills. Customers (even delinquent customers) generally respond more openly to people who want to build a relationship with them and treat them with respect. Credit workers who show interest, listen attentively, empathize and still enforce the rules should train the rest of the staff.

The Get P.A.I.D.TM Program

To address these, and other Payment Gap issues, a set of credit management ‘tools’ can help, including: a credit policy manual, credit check systems, a series of standard forms and letters, a clear statement of your ‘terms and conditions,’ and a procedure for dealing with delinquent accounts. These are more fully described in a new book, Get P.A.I.D.,TM A Guide to Getting Paid Faster, a comprehensive system for businesses and credit managers to increase profits, reduce costs and delays, while developing better relationships with customers. Get P.A.I.D. is the first in a series of books and training materials to help businesses reframe their credit policies to be both more responsive to customers and more accountable to a company's bottom line.

With the economy as it is and leasing companies staffing up their recovery operations, Get P.A.I.D. provides a great training tool for the inexperienced and a great review for others. Credittoday.com recently said about the book “employees who are new to the credit and collection field will find this book is an excellent introduction to the profession – you might want to make it required reading for new hires.”

For more information or to buy your copies visit www.getpaidsystem.com or www.amazon.com.
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Robert Bernstein, Esq. is managing partner of The Bernstein Law Firm, P.C. and a founding member of LEAN. The main office of the firm is located in Pittsburgh, Pennsylvania, with satellite offices throughout the state. Bernstein served as past president and is currently the treasurer of the Commercial Law League of America. He recently served as chair of the Committee on Ethics and Professional Responsibility of the CLLA. Bernstein is a past chairman of the American Board of Certification, the country's only bankruptcy and creditors' rights certifying organization. Mr. Bernstein can be reached via email, rbernstein@bernsteinlaw.com or 412.456.8101.

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