Is it collection or correction?

My last week’s column on common causes of collection problems elicited so much response or more specifically follow up questions from my readers. Unfortunately, I cannot answer each and every question being asked as each collection problem has lots of circumstances and needs a more thorough review before I could even provide a more sound advice. What I can do however is provide a more generic answer to these concerns and in this way, you would know how to handle it in general.

One of the emails I received has an interesting collection problem. The email reads: “Good day. Our company had a collection problem. Our invoices and supporting papers are in order but the client had a second thought for the amount and refused to settle the invoice. The previous invoices on exactly the same kind of jobs and exactly same amount were paid but the succeeding invoices were refused due to the amount not acceptable to them.  The invoices are more than one year old. We already advise them to change the amount on their satisfaction but until now the client refused to pick up the phone. Many thanks in advance for your advice.”

This kind of collection problem is one of the more common scenarios for companies in the service industry such as manpower provider, security agency among others. When your customer is claiming that there is “something wrong with the invoice”, do not assume immediately that you are wrong and your customer is correct or vice versa. The cliché that “customer is always right” is not always applicable in this case. An invoice is a document that must be done with due diligence and issued with great accuracy as it is a binding document that is enforceable. An invoice sent to the customer must be issued “free from doubt” and supported by documents that will attest to the accuracy of the amount. 

However, it is always advisable to give the customer the “benefit of the doubt” that it is a legitimate concern and not just a stall tactic or just a whimsical alibi not to pay you. Do not presume also that it is about correcting the total amount. This is almost always the common mistakes of the one issuing the invoice, if you are having this problem, immediately do a problem-solving approach in resolving the issue. It is also imperative that you set a reasonable timeline on resolving the issue. Normally, a customer who is willing to resolve the matter will be able to clear the concern within 2 or 3 weeks. Having this matter unresolved for over a year is not acceptable and is a point against the company who issued the invoice.

In a problem solving-approach, there are 3 simple steps to follow:

Step 1: Establish the Point of Conflict. As immediate as possible, find out exactly what your customer is disagreeing. Is it the amount, is it the computation, is it the number of hours, is it the lack of supporting documents, is it the service, is there any unresolved (prior) complaint, or maybe is it the misspelling of the person’s name. Even if you cannot or will not be able to accurately pin point the point of conflict, at least endeavor to have an idea exactly what your customer is complaining about - ask the secretary, ask other officers of the company. Sometimes, it is not about the amount, but how you arrive at the amount. 

 For comments, rejoinders and questions on credit & collection, send emails to [email protected].