Every single customer on EFT (Electronic Funds Transfer). Does this sound like a pipe dream? It’s not. Some Meridian clients have been able to convert all existing customers to EFT and most have instituted mandatory EFT terms for all new customers. The result has been a tremendous boost in company cash flow. Some report they are even collecting customer cash BEFORE supplier payable due dates!
It’s not as difficult as you may think. Follow these steps:
Contact your general ledger vendor – Most general ledger software program vendors are well prepared for EFT with specific modules that make the process easy and user-friendly for your staff. Your vendor is best positioned to help you understand the EFT process as it relates to your receivables accounting and collections process. Plus, they can refer you to other companies using the same GL process.
Contact a Reference – As you work with your GL vendor, ask them what customers they have that use EFT for most collections. Then, call that company. You want to learn the quirks and tricks of your software and no one will know and understand the process more than another jobber on your same GL system. Have your office staff talk directly to their EFT person. They will likely have great little shortcuts and efficiency enhancers you can adopt, plus be very upfront with anything troublesome about the vendor’s EFT system.
Contact Your Bank – Most banks are well versed in EFT transactions and will be a tremendous help in implementation. In the event you are with a very small or very technically unsophisticated bank that can’t help you with EFT processes, and assuming they are not willing to implement the process, switch banks. EFT is too important to your cash flow to delay.
Educate staff about customer benefits – You can have terrific accounting systems set-up that will work totally seamlessly, but if the sales and customer service staff don’t buy into the idea and understand why it is good for customers, they won’t sell it effectively. Get their buy-in through education.
Work the bugs out – With either your own sister company, or a very tolerant loyal customer, use them as a beta site to work out any unforeseen problems before you roll EFT out in mass to all your customers.
Attorney review of documents – EFT documentation should be reviewed by your local attorney, particularly if the EFT agreement becomes part of your new customer application. Be sure your language stays within the law.
Create a cost-effective EFT marketing plan – Converting existing customers to EFT terms takes some savvy and inducement. Most businesses achieve the switch by offering attractive terms that, when penciled out, actually save their company money even after the discounts once the receivables holding cost is factored into the equation.
For instance, one family business owner found that he could offer as much as a 3% discount for net 10 terms and 2% for net 20 terms and still be ahead cash wise. His previous non-discounted 30-day terms were being stretched to about 60 days anyway!
Set conversion goals – Most begin their EFT conversion with dealer accounts, followed by other high volume fuel customers. Have your accounting and sales staff set realistic timetables and a series of achievable weekly conversion goals. The final goal should be 100% conversion of all accounts.
It’s not uncommon in rural areas for long-term agricultural accounts to be EFT resistant, however, attractive terms usually overcome this resistance. Old-timers may not want to jump on the EFT bandwagon, and will need extra effort from your sales staff to get converted.
Monitor Progress and Get Feedback – With the system ready, a process clearly delineated, training completed, goals set and marketing commenced, it’s critical that you have regular meetings to review actual conversion rates compared with goals, and get feedback from your staff concerning any problems or resistance they have encountered. Problems and solutions should be discussed openly. If you can’t come up with solutions, remember that other non-competing businesses can be tremendous resources. Any company that has over 50% EFT collections has usually encountered and conquered the problems you are facing. They are not insurmountable.
Celebrate success – As you achieve monthly goals, celebrate! EFT success creates positive cash flow and saves your company money. Quantify those savings, show appreciation and consider sharing the wealth with staff responsible for EFT conversion. Sometimes a pizza lunch and public recognition of the team are all that’s needed to keep your EFT team pumped up and working toward the 100% conversion goal. Other times you may want a nice fat bonus for the team when they the 100% target. Either way, celebrate success and keep it fun.
