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Maximizing EFT Revenue – Collecting Past Dues

If you have a solid set of EFT packages in your sales portfolio, you are already ahead of the game. I am a huge proponent of the value that EFT brings to your business and have discussed the topic various times. However one piece of the puzzle that salons rarely focus on is reducing the revenue bleed from the EFTs already sold, i.e., past dues. Let’s face it, there is a unique skill required for collecting past dues. While some customers are easy to deal with and will be happy to update their credit card and pay the balance and decline charge, others will make this a very tedious and sometimes confrontational situation that leaves the customer unhappy and you also risk losing the customer. There are several ways to make this process smooth for your customers. For Tan It All, we follow a set process for collections that has resulted in us collecting significant amounts in past dues while keeping our customers satisfied. When EFT declines for us, Tan-Link first checks to make sure if it would be possible to capture this revenue in a week through the automated redrafts that happen on the 8th and the 23rd of the month (a week after the 1st draft and 15th EFT draft dates). If the card declined for a general reasons such as lack of funds, its very likely the funds will be available in a week and the redraft will capture those funds along with the decline charges. However if the card has declined because the card has been reported as lost/stolen, then it moves on to the next step immediately. A very personal email (from our Operations Manager) is automatically sent to the customer informing them of the decline. Included in the email is a link that allows them to not only pay for the past due, but also to update the card on file at the same time. We even offer to automatically waive the decline charge for the customer if the payment is received the same day, which is an awesome experience for the customer and with zero involvement from our staff. Now if the customer does not pay online or call us to pay the balance, Tan-Link automatically generates a physical letter that is mailed to the customer. There is an initial letter which informs them of the past due and requests a payment as soon as possible. If the balance is not taken care of, a second/final letter is sent with somewhat more urgent/pressing tone. The frequency of the letters, the content of the letters, and the situations/conditions for which the letters are sent (such as how many declines, amount of declines etc) are all customized to make all our communications warm, non-confrontational and with the intent of keeping the customer with us. It would be bad business to collect a past due and lose the customer in the process. Now for that minority of customers that will not respond to emails, calls, or letters, a decision is made on whether this customer is a candidate for sending to a collections agency. A word of caution here. Sending anyone to collections should not be taken lightly, however customers who blatantly violate your policies and abuse your services should be sent to collections. Tan-Link takes care of this part as well where you can select which customers need to go to collections and with a click of a button, sends all the required information to the collection agency we use. In 2016 alone, 5% of our entire revenue came from past due collections. As you can imagine, this is a rather large number. The best part is, it takes us very little effort to do collections because most of it is handled by our system. Very little employee involvement is required. If your salon does EFT and you are not really on top of past due collections, you are leaving a lot of money on the table. Money that you already expected to make but didn’t because of lack of process, systems and a mechanism that allows you to be effective.

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