Sales is king of company incentives: Salespeople receive them for selling, they offer them to customers for buying, etc. How about your company offers them to customers for paying you instead?
It’s a straightforward idea — customers ordered your product or services, so they should pay you for them. But it doesn’t always work out that way … especially these days.
And while prompt-pay discounts are a good carrot, some of your peers are finding that pairing discounts with other incentives really gets the cash flow boost they’re after.
The idea: Make your Credit department act more like Sales.
One company we know started offering incentives to their customers in addition to their usual discount program.
The earlier a customer paid, the better the incentive. Nothing budget-busting: Enticements ranged from golf shirts with a company logo on them to a set of clubs.
Yes, it’ll be something else finance staffers will have to track. But if your A/R system already tracks who’s earning discounts, it shouldn’t be too much of an administrative hassle.
And it’s amazing how easily customers will get hooked on these little extras. The company that tried this approach reported that their customers were completely excited about the program. The pick up in payment speed was a boon to their cash flow that more than covered the cost of the incentives.
Even better: The company enjoyed a 10-month long sales spike following the initial rollout.
