subject: What to do When Customers Won't Pay – 5 Ideas for Debt Collecting [print this page] What do you do when the customer won't pay? In situations like this, your cash flow suffers and.debt collecting becomes a time consuming part of your operations and inefficiently allocates your time and resources away from your core business.
If you are continually faced with repeat offenders, perhaps it is time to look at your existing systems for managing your debtors' account. These ideas may help in developing and implementing a policy for debt recovery which can become a part of your business' operational procedures.
Reminder Phone call
There will be times when an account has genuinely been overlooked by a customer so if your business procedures allow for a friendly phone call reminder, this may be all that is needed to prompt payment from them. When you make the call it is a good idea to put a time limit on the expected payment so you can follow up with another call on the due date.
Reminders on follow up invoices
If there is a ever a need for a follow up invoice it is important to highlight the fact that it is outstanding. There are brightly coloured stickers available to bring this to the attention of the customer upon opening the account. Utilising these is a proven tool to improve your collection ratio on overdue accounts.
Detailed statements listing all outstanding amounts
A number of businesses have ceased the use of sending out end of month statements. But if you have clients that are on monthly trading terms it is still good practice. Not only does it help the customer to reconcile their accounts payable, it is also a chance for your accounts receivable department to keep on top of outstanding payments.
Demand Letters
Demand Letters need to be written in a firm manner that informs the customer you will follow up the delinquent account by a certain date. If it is an old debt let them know you will have no alternative but to hand the matter over to an agency if payment is not received. It is important not to bluff because debtors can become accustomed to this and continue to not make any payments.
You can greatly assist thedebt recovery agencies by keeping all the documentation from the first invoice and subsequent notices. Keep records of phone calls and all dealings with the customer in case you need to pass this on to the agency.
Finding an agency
Outsourcing your debt collections to an agency need not be seen as a last resort. Having someone else look after your monthly accounts and troublesome payers might become part of your regular accounts policy and procedures. Find a reputable agency through an internet search or ask others in your industry for their best recommendations.
When business is booming, time is limited. There will be days when there doesn't seem to be enough hours in the day to fulfill your administrative roles but keeping ahead of your debt control can only benefit the business in the long term.
What to do When Customers Won't Pay 5 Ideas for Debt Collecting
