Saturday, 25 June 2011
Deanem Collections: How to improve your profits.
Deanem Collections: How to improve your profits.: "This week I have been inspired by Robert Craven of The Directors Centre who I had the pleasure of hearing at a Barclays bank business semina..."
How to improve your profits.
This week I have been inspired by Robert Craven of The Directors Centre who I had the pleasure of hearing at a Barclays bank business seminar.
Robert posed the question of how can you improve your profit margins? Do you A) raise your profits, B) cut your profits or C) cut your supplier costs. I still find it strange that most people still beleive that by cutting your prices you’ll become more profitable, especially when you consider the following.
If you raise your prices by 10%, you reach the same profit margin in 75% of the time. However, if you cut your prices by 10% you have to work up to 30% more or an average 2.5 days longer just to reach the same profit margin.
The question is then always asked “But some of my clients wont buy from me if I put my prices up” You know what that person is generally right, but what he/she neglects to take in to consideration is that the customer that quibbles is usually one of the bottom performing customers. You know the type, they do you a great favour by placing an order with you but are never happy with the colour, design, layout etc and then take the longest to pay their invoice.
What Robert didn’t explain was how to raise your prices without upsetting your customers hopefully I will now rectify that.
What you have to do is firstly decide on how much of a price rise you need or want, remember the old adage cheap is not always best. Let’s say you decide to put your prices up by an average 10% you also recognise that some of your better performing clients won’t be happy. In which case you should have a two or three tier price structure for good customers and one for new customers or the bottom performing customers.
The next decision to make is when will the prices go up, let’s say for the purpose of this blog you opt for Aug 1st. Once decided take a long and honest look at your customer base and split them in to two categories. The first should contain those customers that pay you on or before the due date or where you have agreed special terms etc. The second group, which you will find is generally the largest and will contain all the customers that pay late, who make unreasonable demands or who are in your mind “Scum”.
You should send the 1st group an email explaining that while you have had to put up your prices by an average15% from August 1st you have decided that because you value their business and settle their invoices within the agreed terms you will hold the price rise to 10%. History shows that the majority will accept the price rise and for those that question it, you can always negotiate “more” favourable settlement terms.
For the second group send them an email explaining that due to circumstances beyond your control as of Aug 1st your prices for those wanting 30 days credit prices will raise by 15%. However for those who settle their accounts within 14 days of delivery the price rise will be 12%. For those who are prepared to pay on receipt of your invoice the prices will only rise by 10%. You’ll be amazed by the number that will agree to pay early.
The upside in adopting this strategy is by and large you will only loose the customers from the bottom of the pile and those that are left will be on average paying between 5 & 10% more. Another by product of this strategy is that your accountant will have more respect for you because you would have improved your profit margin during a recession.
To find out about David and the work of Deanem Collections Ltd, please visit our website: www.deanemcollections.co.uk.
Robert posed the question of how can you improve your profit margins? Do you A) raise your profits, B) cut your profits or C) cut your supplier costs. I still find it strange that most people still beleive that by cutting your prices you’ll become more profitable, especially when you consider the following.
If you raise your prices by 10%, you reach the same profit margin in 75% of the time. However, if you cut your prices by 10% you have to work up to 30% more or an average 2.5 days longer just to reach the same profit margin.
The question is then always asked “But some of my clients wont buy from me if I put my prices up” You know what that person is generally right, but what he/she neglects to take in to consideration is that the customer that quibbles is usually one of the bottom performing customers. You know the type, they do you a great favour by placing an order with you but are never happy with the colour, design, layout etc and then take the longest to pay their invoice.
What Robert didn’t explain was how to raise your prices without upsetting your customers hopefully I will now rectify that.
What you have to do is firstly decide on how much of a price rise you need or want, remember the old adage cheap is not always best. Let’s say you decide to put your prices up by an average 10% you also recognise that some of your better performing clients won’t be happy. In which case you should have a two or three tier price structure for good customers and one for new customers or the bottom performing customers.
The next decision to make is when will the prices go up, let’s say for the purpose of this blog you opt for Aug 1st. Once decided take a long and honest look at your customer base and split them in to two categories. The first should contain those customers that pay you on or before the due date or where you have agreed special terms etc. The second group, which you will find is generally the largest and will contain all the customers that pay late, who make unreasonable demands or who are in your mind “Scum”.
You should send the 1st group an email explaining that while you have had to put up your prices by an average15% from August 1st you have decided that because you value their business and settle their invoices within the agreed terms you will hold the price rise to 10%. History shows that the majority will accept the price rise and for those that question it, you can always negotiate “more” favourable settlement terms.
For the second group send them an email explaining that due to circumstances beyond your control as of Aug 1st your prices for those wanting 30 days credit prices will raise by 15%. However for those who settle their accounts within 14 days of delivery the price rise will be 12%. For those who are prepared to pay on receipt of your invoice the prices will only rise by 10%. You’ll be amazed by the number that will agree to pay early.
The upside in adopting this strategy is by and large you will only loose the customers from the bottom of the pile and those that are left will be on average paying between 5 & 10% more. Another by product of this strategy is that your accountant will have more respect for you because you would have improved your profit margin during a recession.
To find out about David and the work of Deanem Collections Ltd, please visit our website: www.deanemcollections.co.uk.
Sunday, 19 June 2011
Deanem Collections: Are you a professional?
Deanem Collections: Are you a professional?: "This week’s blog has been inspired by three people, Clive Mulligan of Simply Consulting and Mark Son of IOT, both are who I would classify a..."
Are you a professional?
This week’s blog has been inspired by three people, Clive Mulligan of Simply Consulting and Mark Son of IOT, both are who I would classify as “Professional Salesmen” and Mrs Sandra Field my collections manager at Deanem Collections Ltd.
What do I mean by “Professional Salesmen” and by the way a “Professional Salesman” can be male or female. A dictionary defines professional as “A person who engages in an activity with great competence”. While I define it as someone who takes the time to insure that he or she provides the best service or care that they can.
What makes Clive & Mark stand out is that they were both trained in the art of being a salesman, they have knowledge of not only their products and services but also the products and services of their competitors.
I still find it strange that eyebrows were raised and questions asked when I appointed Sandra Field as my collections manager. Sandra is a lady of mature years but over the course of those years she has acquired an encyclopaedic knowledge of debtors and debt collection. This knowledge has enabled her to overcome many objections that less knowledgeable people wouldn’t have been able to counter.
This week was a prime example of how her calm and professional approach defused a potentially difficult situation when Sandra was confronted by a debtor who was determined not to pay, because “He disputed the debt, as the work was not authorised”. Our client, runs a property maintenance company and he carried out some remedial works on a roof and windows on a block of flats in January. His terms are 30 days, but like many he didn’t want to upset his “client” by asking for his invoice to be paid. Eventually John* asked if we could collect his overdue invoice and six months after it had been raised it landed on Sandra’s desk.
When Sandra spoke to the debtor, they first claimed they hadn’t received the invoice and then after Sandra sent them a copy, they claimed that the invoice had not been settled because the windows leaked when it rained “last week”. Sandra calmly explained that if the windows hadn’t leaked until that point and had survived the winter snow etc, the work was hardly substandard. They then claimed that could not find a copy of the signed order. Obviously a copy was emailed and the “debtor” then started the usual game of chase the person. This is where a debtor will say “Oh I’m sorry Mr / Mrs Smith who signs the cheques isn’t in today, or in a meeting etc” After a day of this, Sandra spoke the debtor’s Managing Director and explained very calmly that if the debt was not settled our client would return to the site and remove his goods, as this included lead flashing, the tenants wouldn’t be very pleased when it next rained.
The gentleman then started to bluster that our client couldn’t do that, Sandra explained that according to our clients’ terms & conditions (which we created for him) he could. The gentleman then asked to see a copy as he could not recall reading them, even though they were printed on the reverse of the order form, which he had signed when he engaged our client. A half hour after receiving them, he phoned, apologised for his rudeness and said he would arrange an immediate BACS payment.
What happened next was fairly common as the debtor phone me and said “I’m very impressed with Sandra’s calm and professional attitude and would I like to come and have a chat about Deanem Collections looking after our credit control”.
Professional people like Sandra, Clive & Mark do not have to shout to make them selves understood or use empty rhetoric to get their way, they use the knowledge they have acquired.
If you would like to find out more about David andDeanem Collections please do not hesitate to contact them either by telephone +44 (0)208 446 7720 or email them at david@deanemcollections.co.uk or visit the website www.deanemcollections.co.uk.
What do I mean by “Professional Salesmen” and by the way a “Professional Salesman” can be male or female. A dictionary defines professional as “A person who engages in an activity with great competence”. While I define it as someone who takes the time to insure that he or she provides the best service or care that they can.
What makes Clive & Mark stand out is that they were both trained in the art of being a salesman, they have knowledge of not only their products and services but also the products and services of their competitors.
I still find it strange that eyebrows were raised and questions asked when I appointed Sandra Field as my collections manager. Sandra is a lady of mature years but over the course of those years she has acquired an encyclopaedic knowledge of debtors and debt collection. This knowledge has enabled her to overcome many objections that less knowledgeable people wouldn’t have been able to counter.
This week was a prime example of how her calm and professional approach defused a potentially difficult situation when Sandra was confronted by a debtor who was determined not to pay, because “He disputed the debt, as the work was not authorised”. Our client, runs a property maintenance company and he carried out some remedial works on a roof and windows on a block of flats in January. His terms are 30 days, but like many he didn’t want to upset his “client” by asking for his invoice to be paid. Eventually John* asked if we could collect his overdue invoice and six months after it had been raised it landed on Sandra’s desk.
When Sandra spoke to the debtor, they first claimed they hadn’t received the invoice and then after Sandra sent them a copy, they claimed that the invoice had not been settled because the windows leaked when it rained “last week”. Sandra calmly explained that if the windows hadn’t leaked until that point and had survived the winter snow etc, the work was hardly substandard. They then claimed that could not find a copy of the signed order. Obviously a copy was emailed and the “debtor” then started the usual game of chase the person. This is where a debtor will say “Oh I’m sorry Mr / Mrs Smith who signs the cheques isn’t in today, or in a meeting etc” After a day of this, Sandra spoke the debtor’s Managing Director and explained very calmly that if the debt was not settled our client would return to the site and remove his goods, as this included lead flashing, the tenants wouldn’t be very pleased when it next rained.
The gentleman then started to bluster that our client couldn’t do that, Sandra explained that according to our clients’ terms & conditions (which we created for him) he could. The gentleman then asked to see a copy as he could not recall reading them, even though they were printed on the reverse of the order form, which he had signed when he engaged our client. A half hour after receiving them, he phoned, apologised for his rudeness and said he would arrange an immediate BACS payment.
What happened next was fairly common as the debtor phone me and said “I’m very impressed with Sandra’s calm and professional attitude and would I like to come and have a chat about Deanem Collections looking after our credit control”.
Professional people like Sandra, Clive & Mark do not have to shout to make them selves understood or use empty rhetoric to get their way, they use the knowledge they have acquired.
If you would like to find out more about David andDeanem Collections please do not hesitate to contact them either by telephone +44 (0)208 446 7720 or email them at david@deanemcollections.co.uk or visit the website www.deanemcollections.co.uk.
Sunday, 5 June 2011
Deanem Collections: Are you prepared?
Deanem Collections: Are you prepared?: "This week’s blog has been inspired by the events that happened to me last weekend. As many know I’ve been training for The London Bikeathon ..."
Are you prepared?
This week’s blog has been inspired by the events that happened to me last weekend. As many know I’ve been training for The London Bikeathon in aid of Leukaemia Research, the ride is 52 miles long starting and finishing in Battersea Park and takes place on Sunday 26 June.
This will be the second time I’ve undertaken this ride, I realised during last years ride that I wasn’t fully prepared for the ride. By that, I mean that while I trained for the ride, none of my training rides were longer than 30 miles. Consequently, on the day I was exhausted by 40 miles and found the last 12 miles very hard.
This year I decided to make sure I could manage the ride and my training has included riding 40 – 50 miles and up until last Monday I was confident that I was preparing myself correctly and would be able complete the ride in relative comfort. Unfortunately, events in the shape of a Polish decorator seemed to have other ideas. After his car caught my bike, sending me crashing on to the A41, the driver claimed not to “have seen me”, funnily enough I had been aware of him at least 5 minutes before the incident. Fortunately, I was wearing a cycle helmet which split so I was very lucky only to suffer a large number of cuts and bruises, including my ribs and was able to walk away from the scene. According to my doctor once the cuts have healed I will be able to complete in the ride. I still feel confident that because I’ve been preparing myself I will be able to complete the ride.
However the driver’s comments made me question his abilities as a decorator, if he could not see me a 217lb cyclist wearing light coloured clothing with fluorescent cycle helmet would he notice misses or runs in his paint work?. When I was taught to drive it was drummed in to me that I was driving a vehicle that if not handled correctly I could kill someone. Consequently, thanks to those lessons I learnt to watch out for children running in to the road, cyclists, other drivers etc .
Another by product of those driving lessons is that I’ve taken the same approach to my work in running a debt collection agency. I’m sure you must be wondering what can possibly link learning to drive a car and collecting debts.
The simple answer is preparation being aware of what the consequences of your action can be. When driving if you do not take in to consideration the road conditions and other users and even pedestrians you’ll more likely to have an accident, if you’re lucky your actions will not result in a fatality.
When we’re instructed I never know until we speak to the debtor if there is a genuine reason for not paying. Such as the time when we were instructed by an accountant to collect £5,500 from a client, the invoice was nearly 9 months overdue. Before speaking to the debtor we carried out some research and discovered that while they had a good turnover and profit ration they were the subject of a large number of unsatisfied County Court Judgments and therefore I felt wouldn’t be worried about further legal action. When I spoke to them the debtor explained that the reason for not paying was one of principle as my client had been late in filing their tax return and they had been fined £450.00 but agreed if my client would credit them, they would settle the outstanding invoice. My client obviously agreed and they received the promised payment.
While I was speaking to the debtor I had to ask them why they had been hit with so many court actions, they explained that each was a matter of principle as they were unhappy with the quality of service or goods they received. Furthermore he wasn’t particularly worried by the Judgments as he never applied for credit, so he was quite happy for the Judgments to remain in place until they no longer counted.
He did say that we were the first collection agency that he had paid and that was because we had asked why he hadn’t paid.
If you would like to find out more about David and Deanem Collections please do not hesitate to contact them either by telephone +44 (0)208 446 7720 or email them at enquiries@deanemcollections.co.uk or visit the website www.deanemcollections.co.uk.
This will be the second time I’ve undertaken this ride, I realised during last years ride that I wasn’t fully prepared for the ride. By that, I mean that while I trained for the ride, none of my training rides were longer than 30 miles. Consequently, on the day I was exhausted by 40 miles and found the last 12 miles very hard.
This year I decided to make sure I could manage the ride and my training has included riding 40 – 50 miles and up until last Monday I was confident that I was preparing myself correctly and would be able complete the ride in relative comfort. Unfortunately, events in the shape of a Polish decorator seemed to have other ideas. After his car caught my bike, sending me crashing on to the A41, the driver claimed not to “have seen me”, funnily enough I had been aware of him at least 5 minutes before the incident. Fortunately, I was wearing a cycle helmet which split so I was very lucky only to suffer a large number of cuts and bruises, including my ribs and was able to walk away from the scene. According to my doctor once the cuts have healed I will be able to complete in the ride. I still feel confident that because I’ve been preparing myself I will be able to complete the ride.
However the driver’s comments made me question his abilities as a decorator, if he could not see me a 217lb cyclist wearing light coloured clothing with fluorescent cycle helmet would he notice misses or runs in his paint work?. When I was taught to drive it was drummed in to me that I was driving a vehicle that if not handled correctly I could kill someone. Consequently, thanks to those lessons I learnt to watch out for children running in to the road, cyclists, other drivers etc .
Another by product of those driving lessons is that I’ve taken the same approach to my work in running a debt collection agency. I’m sure you must be wondering what can possibly link learning to drive a car and collecting debts.
The simple answer is preparation being aware of what the consequences of your action can be. When driving if you do not take in to consideration the road conditions and other users and even pedestrians you’ll more likely to have an accident, if you’re lucky your actions will not result in a fatality.
When we’re instructed I never know until we speak to the debtor if there is a genuine reason for not paying. Such as the time when we were instructed by an accountant to collect £5,500 from a client, the invoice was nearly 9 months overdue. Before speaking to the debtor we carried out some research and discovered that while they had a good turnover and profit ration they were the subject of a large number of unsatisfied County Court Judgments and therefore I felt wouldn’t be worried about further legal action. When I spoke to them the debtor explained that the reason for not paying was one of principle as my client had been late in filing their tax return and they had been fined £450.00 but agreed if my client would credit them, they would settle the outstanding invoice. My client obviously agreed and they received the promised payment.
While I was speaking to the debtor I had to ask them why they had been hit with so many court actions, they explained that each was a matter of principle as they were unhappy with the quality of service or goods they received. Furthermore he wasn’t particularly worried by the Judgments as he never applied for credit, so he was quite happy for the Judgments to remain in place until they no longer counted.
He did say that we were the first collection agency that he had paid and that was because we had asked why he hadn’t paid.
If you would like to find out more about David and Deanem Collections please do not hesitate to contact them either by telephone +44 (0)208 446 7720 or email them at enquiries@deanemcollections.co.uk or visit the website www.deanemcollections.co.uk.
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