receivables and collections

[JohnWilson]

This is a perfect business model - how did you transition long standing accounts? Our situation doesn't seem to lend itself to a sweeping transition.

The lab has been around since 1962 - I have dozens of accounts that have worked with us for over 20 years. Like I said before, payment is not generally a problem with any of our clients so it is hard to justify forcing them to change a system that is working well overall.

The other issue I ran into when rolling out the credit card process was the demographic of our clients - Many are located in the areas in and surrounding Concord and Lexington Massachusetts. We are dealing with old Yankee money that doesn't prescribe to modern financial thinking which includes having credit cards - many of our doctors admitted to not using them. Who needs a credit card when there is money in your account that came over on the Mayflower??

Like I said - we are making it work. All new accounts are treated differently - I'm more interested in hearing the process you followed to get an entire client list to transition to this system?

I implemented this strategy out of frustration. I was like the vast number of labs that started before me and after me and just gave 30day terms to ANYONE. I allowed better producing clients to string me along over the years and as I have outlined before had many instances where they would file BK and leave me with less stomach lining.

After the last 25k of bad debt I implemented a strategy that ALL new accounts were mandatory on credit-cards. NO EXCEPTIONS. I also reached out to my existing clients and told them of our new policy and asked them which day they would like their cycle to run from. I did not allow any client that was currently outside or EVER were outside of terms tell me no. If they did I did the hardest thing and stood my ground, explained I needed to take control of the AR and that I was not a bank to be able to carry the paper. I lost some, some that left have returned. some didn't. My solid clients that would always pay in time I gave them an incentive for the first year to get them hooked on the system. I gave them a 2% credit per month for the first year. Not off the bill but a credit to use for future work (deferred credit). We raised our prices to accommodate the loss and not one person called me out on it as it was situated at the time of my yearly fee increase.

Since I have gone this way it has given me the ability to be debt free, purchase new equipment with cash and negotiate the best rates for everything in my lab.

It really can be this easy, stand your ground, set a policy and stick to it. Do not be weak on enforcement and have the faith that respect will be given when you DEMAND it.

 

[Affinity]

I would love to hear Johns thoughts on paying the 2% processing fees.. Im sure you just roll that into your costs.. But if a lab is offering a CC payment with 5% off for early payment.. Your paying $8 on every 100 you make just to allow someone to pay with a CC..?

What Im asking is, do you tell your accounts that if they want to pay with CC they will pay an extra 2-3% or do you eat it? Is it really worth losing 8% just to have your money on the 15th?

 

[Affinity]

You snaked my post John!

 

[JohnWilson]

You snaked my post John!

LOL