If your business is facing cash flow problems because of unpaid invoices, then you’re not alone. Not only are many Americans in debt, but millions are defaulting on their payments. However, collecting payments from delinquent customers isn’t easy.
On one hand, your business needs to collect the money that its rightfully owed for delivering its services. On the other, in the digital age, a business’s reputation and its important relationships can be damaged with the wrong move.
Here are some tips that can help you collect payments without hurting your reputation:
#1 Always Remain Professional
Regardless of whether your delinquent client is old, new, rude, polite, in a financial crunch, or simply doesn’t want to pay, it’s important to remain professional. A friendly but detached attitude is not only more likely to get you paid, but it may also help you avoid stressful situations.
In an era where one aggressive phone call or email can find infamy on the internet, your business should avoid controversies. Train your staff to invoice immediately, send timely reminders, and to use the latest accounting software. Help them learn conflict resolution techniques. Be open to your customer’s concerns and offer to rectify issues when it’s reasonable to do so. Remember, your late-paying client may turn into your best customer later.
#2 Be Detail-Oriented
Try to communicate on email where everything is on record to avoid misunderstandings later. Use a detailed and watertight contract when possible. If you plan to incentivize timely payments with early bonuses and late fees, then indicate this clearly on the contract.
#3 Deliver the Best Product Possible
You’re more likely to suffer from late payments if your product is substandard. If a department, service, or product is suffering more than others, then investigate to see where your organization can improve.
#4 Take Pre-emptive Measures
Sometimes, the best way to avoid issues with delinquent customers is to take pre-emptive measures. Don’t offer credit to new customers without conducting financial checks. You may ask for deposits from customers with a poor or non-existent credit history. Depending on the type of business, can request post-dated cheques from new customers or store their credit card number on file for automatic billing.
Accept various forms of payment, including online options. This way, your clients can quickly clear their debts.
#5 Partner with the Right Professionals
More businesses are using consumer debt collection services to recover payment from their debtors for a variety of reasons. Not only are good professional debt collection agencies more effective at collecting payments because of their full-time staff and their ability to report debtors to the major credit bureaus, but they can be more cost-effective.
Your business may not have enough past-due accounts to justify training an in-house collections department. These resources should be spent on improving your profitability. However, when partnering with a debt collection agency, remember to use a company that’s ethical and reputable. An agency that will treat your customers with dignity and respect can help improve your accounts receivable turnover ratio without hurting your business.
These five tips can help you recover your payments while maintaining your standing in the business community. A strong reputation and an effective collections process are both important for the health of any business.