Embrace the power of mail

How mail can drive prompt payment

03/08/2010

For small and medium sized enterprises mail can play a vital role in maintaining cash flow during challenging economic times. Pitney Bowes offers advice on making the mail channel deliver hard results.

Taking the time to optimise cash flow

Although business analysts are beginning to spot the fabled green shoots of recovery there remains an intense scrutiny on spend and cashflow. With margins squeezed and skeleton staff working additional hours, finding the time to assess current practice for sending invoices and receiving payment may not be easy. But the onus is on SME businesses to adopt the best possible methods to optimise cashflow.

In small businesses it will often be the business owner or a senior staff member who is tasked with sending bills and chasing late payments. Understandably, these timepressured staff will often choose what they perceive as the most convenient method over a more considered financial management approach. However, in the long-term, this represents a false economy.

Sending a postal invoice or reminder to a customer may be regarded as more time-consuming than firing off a quick email. But research suggests that this is time well spent.

Prompt by post

Pitney Bowes surveyed 3,000 consumers across Europe (UK, France, Germany), asking them whether they were more likely to pay a bill received through the post rather than one received via email. The results were conclusive. 68% of European consumers stated that they would be more likely to pay posted bills. Any method that encourages prompt response must be embraced. In truth, despatching accurate mail that is professional in appearance is no more time-consuming than emailing. The latest technology can automate the folding and insertion of documents and will weigh and size envelopes to ensure that the correct postage is added.

The mailed invoice or reminder also has the advantage of longevity. These documents will be opened, read and retained, remaining visible and constantly prompting in a way that emailed messages or phone reminders cannot.

The frequency of communication will vary between each customer and, over-time, businesses will be able to build up an accurate picture of those that need regular chasing and those that need an occasional gentle reminder. Again, mail can play a key role in the management of this activity. Colourcoding bills is a classic method – everybody is aware of the meaning of a red bill and the associated urgency. There is no doubting that formal communications detailing the possibility of legal action carry more authority and gravitas if delivered as hard-copy documents. These documents can also be tracked and traced to log precisely when the intended recipient received them.

Of course, the mail is also useful as a means of rewarding customers that regularly pay on time. Incentivising these customers is a proven way of ensuring repeat behaviour and businesses are beginning to get wise to including such incentives with the invoice – either printed directly on the bill or as an insert.

Make the mail do the work

SME’s must take every measure to ensure a regular cashflow – particularly at a time when assistance from the bank is difficult to come by.

Research shows that sending bills and reminders through the mail can be advantageous in the push to get paid. The temptation may be to fire off emails or make quick phone calls. But mailed communications stay with the recipient and can prompt and persuade in a variety of ways.

Without exception, SME’s must ensure that they have a sound financial management strategy in place to steer them through challenging times. Embracing the power of mail – both to deliver bills and to ensure that those bills get promptly paid – is an essential element of any such strategy.

View the original article at http://pressroom.pitneybowes.co.uk/surveys_and_research.asp