Establishing the correct point(s) of contact should be your very first step when a new customer comes aboard. An ideal method of collecting accurate contact information is to have every customer fill out a "new customer profile" form, which comprises basic company information, as well as your organization's key contacts and the individuals responsible for payments. Make sure that the profile is complete, that the customer provides trade references, and that those trade references also have the correct contact information. The profile should also note the best way to bill the customer organization (e.g., electronically or by mail).

These initial interactions set the tone for the ongoing customer relationship, so tread lightly as you develop new-customer profiles. Be friendly, but keep the relationship at an arm's length. It takes time establish a solid rapport; it isn't like you can set up the customer profile, then immediately and automatically have a full-fledged business relationship.

Another part of creating a profile on a new customer is performing a credit check and verifying the customer's information. Communicate your findings with your customer, and reiterate that you are doing so to build trust. And if there is an issue with the credit check, don't turn the client down right away. Work with the customer to figure out the issue. Can it be corrected? Is there an underlying reason? If possible, find a way to help the customer overcome the issue. For example, you could ask for a deposit up front and a balance in the next 30 to 60 days. There are options aside from flat-out turning down the customer.

Ideally, a company will house customer profiles in a customer relationship management (CRM) system, which gives various departments throughout the company—including sales, marketing, and purchasing—access to the same information. In addition to determining where to store customer information, a company should establish policies around keeping contact information up to date. This comes back to the relationship that the collections team is forming. If they are staying in touch with their contact and have a good relationship, they should know well beforehand if something changes.

Create a rapport.  Collections staff need to get to know their main points of contact at customer companies, well beyond knowing the person's name, email address, and phone number. This is all part of establishing a rapport. Over time, the team should get to know what these people like to do beyond work. What are their hobbies? Where do they like to vacation?

The accounts receivable (A/R) team should take a friendly approach to maintaining the business relationship, trying to make a personal connection with the company's contacts at every customer company. Of course, as staff try to find out what makes customers tick, they shouldn't get too personal too fast. There is definitely such a thing as too much information in a business relationship. But when a collections employee sends an email to a customer, he or she can start off with a simple "How are you?" or "How was your weekend?" This opens opportunities for sharing and finding common interests. Maybe such an opening will reveal that both the customer and the collections employee are into boating, which will result in a quick email discussion about the past weekend on the water. When A/R staff can create this type of rapport, customers won't dread their next email or phone call and will more readily respond to their requests.

Communicate "softly."  It's easy to come across as harsh when you're asking to be paid, but you don't want your collections team to damage the company's relationship with every customer who is behind on payments. A first step is to tweak your company's communications tools to take a "softer" approach. Personalize emails and make sure they're polite. Have staff start each communication by saying "hi" or "hello," and "I hope your day is going well." Then, have them sign off with a pleasant "thanks for your help," or "I hope to hear from you soon."

Throughout each email or phone conversation, the tone of the collections employee should be friendly, yet professional and not overly excited. Staff should speak with a purpose and have a clear objective in mind. They do not want to come off as overly demanding, but they must project a strong conviction; this is especially useful when speaking to a customer who is late on a payment. They can ask whether changes in the customer's business are affecting its ability to pay. Doing so can not only present a somewhat empathetic approach to collections, but might also provide some useful insights into the external business climate that shed light on why the payment is late.

Once again, the ability of the collections staff to handle these types of situations comes back to the relationship and rapport they've built with the customer. Offering to work with the customer on mapping out a plan through which they can catch up on payments can work wonders for customer satisfaction.

It's worth noting that sometimes communicating softly just doesn't work. A customer may respond negatively, despite the best efforts of your collections staff. What, for example, is the appropriate response when a customer sends a disgruntled email stating that they cannot pay and concluding "Don't call us; we'll call you"? As a best practice, no one should respond for 24 hours. In a case like this, staff need time to think carefully about their response. It's also a good idea to draft a written response and leave it on your desk overnight. The next day, with a clear head, review what you wrote and remove any emotion from it. Make sure the comments are strictly factual because you do not want to throw gasoline on that spark. It wouldn't hurt to solicit the opinion of individuals in sales or others inside your organization before you respond. Just make sure that regardless of the customer's attitude, you handle the situation in a manner that is both professional and effective.

Be available.  It's imperative that the collections team respond quickly to customer requests. The team's top priority should be helping customers with whatever they need in order to pay an invoice, so staff need to be readily available to answer questions or hop on conference calls with customers to discuss whatever may be causing delayed payment.

In order to ensure that you are adequately supporting customers, consider requiring staff to allocate a specific block of time each day for reaching out about past-due payments and responding to incoming customer contacts, while leaving room to handle the occasional urgent matter. Incentives based on performance metrics can help encourage a team to keep up with customer contacts. For instance, once a quarter, you might go through the team's records and determine how many contacts each rep made per day, along with the dollars collected as a result of each contact. If top performers receive bonuses, your team won't think twice about picking up the phone to make an extra call.

Ring the bell.  In many sales departments, the manager will ring a bell—literally—to let the team know when a big sale closes or when the group hits a quota. The same type of recognition can be helpful in a collections department. When a tough collection comes in or the team meets a key goal, give them the praise they deserve and make sure everyone is aware of the accomplishment. Likewise, remember to thank your point of contact at the customer organization for making the payment.

Ringing the bell is definitely a morale booster. Just make sure not to catch anyone off guard!

Visit the customer.  In today's business environment, when most professional interactions are conducted via email or over the phone, never underestimate the impact of a face-to-face visit. This is especially true for large customers on which your company is dependent for significant cash flow. Putting a name with a face can go a long way in establishing a rapport. You can make a stronger, more personal connection through face-to-face interactions than you can through phone calls or emails.

It's a good idea to visit, once a year or so, any customers that could make or break your organization's profitability. Typically, only the collections managers make such a visit, but if you are working with a complex customer with a complicated issue—for example, if a customer is having issues with processing invoices—the front-line collectors should also go. You may also want to visit legacy customers, those which have been clients for a long time, as well as those that have the potential to become legacy customers. These visits help continue the relationship and maintain its integrity. Although your customer may not feel the need to meet, and may not even want to see your collections staff if things are going well, you can still suggest an in-person meeting. The best way to do this is to align with the sales rep and join in on his or her next visit.

It is also vital to meet right after the company acquires a new client. This will help collections staff feel them out, understand their expectations from a billing perspective, and learn more about the business and its goals. Occasionally, a customer may even want to visit you, which is always a big plus in the working relationship.

Whether you are meeting at the customer's location or the client is visiting you, there are several key points of discussion. Starting your conversation with a general discussion around the question "How's your business?" is always a safe bet. Throughout your discussion, ask if the client has any feedback regarding your financial services department's customer service performance. Is there anything you can do to make the client's job easier? Are there any changes in contact information that you need to know? Always close your portion of the discussion by reiterating your contact information and availability to assist them. And, if appropriate, bring an accounts receivable statement to review with the customer.

Work with sales.  As a final tip, the credit and collections teams should make a concerted effort to get to know everyone on the company's sales team. Collaboration between the groups is crucial. You are all working with the same customers as you drive toward a common goal for the company.

Go to lunch or dinner with sales reps, ride along with them on customer visits from time to time, and meet every couple of weeks or so to review customer accounts. Sales and collections staff have a lot to learn from one another. Not only that, but by working together as a cohesive team, the groups can resolve issues more quickly on large and hard-to-collect accounts. Your A/R team should feel empowered to help the sales team and can take some of the weight off their shoulders. The sales team won't have to worry about the financial side of the deal; instead, they should be focused on doing their job—closing new business, supporting the customer, and providing new information on new products and services.

The best practices in collections are really very simple. Ultimately, they all boil down to this: Treat each employee at your customer's company as if they were your own personal customer. Beyond ensuring that you are at the top of their list for getting paid, you just may make a friend along the way.

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Jeffrey Gillis, CPA, CGMA, MBA, is CFO of Barcoding, Inc. A 2015 recipient of the Baltimore Business Journal's Best in Finance: CFO Award, Gillis has more than 20 years of experience in the financial, accounting, strategic planning, and account management spaces.