Showing posts with label Collections. Show all posts
Showing posts with label Collections. Show all posts

Friday, July 30, 2021

How to Appropriately Collect Late Payments at Your Business

Clients who don't pay on time can be a frustrating disruption to your company's cash flow, and collection efforts are a time-consuming and sometimes expensive hassle. Many late payments can be collected, however, if you start collection efforts early and take the right actions.

Start With a Reminder Letter

Some people simply forget to pay, and a reminder letter is a welcome opportunity to settle the debt. You may even want to send a letter a few days before a payment is due. 

A form letter is the best idea because clients may not be offended or take a form letter personally. Be sure to ask the client to contact you if they need to discuss payment arrangements or have a problem with the products or services you provided.

Make a Follow-Up Call

If your letter doesn't get a response within 30 days, a phone call should be the next step. If you can reach a client by phone, they may be willing to explain why the payment has been delayed or give you payment information so they can resolve the issue. 

If phoning is unsuccessful, you may choose to send an email with instructions for paying online.

Use a Collection Agency

Commercial debt collection can be especially difficult because it may involve dealing with big businesses that don't respond well to collection efforts. 

A good debt collection agency that is experienced with commercial debt collection can handle your aged accounts, overflow beyond the capacity of your accounts receivable department, and more. 

Some companies, like Leib Solutions, know that agencies can usually interface with your billing system and communicate with your on-site staff for seamless collection.

Offer Options, Not Threats

Threatening your past-due clients is illegal and unlikely to work anyway. Instead, offer multiple ways and opportunities for payment and the chance to preserve the relationship with your company so they can continue to benefit from your products or services. 

Offer installment plans and easy credit card payments. As a last resort, consider offering to take partial payment to settle the account. Getting something from the client is better than nothing.

The easiest option for your company may be to require payment for all goods and services in advance. Almost as easy is when clients perform as expected and pay on time. 

Even when these things don't happen, you can collect past-due accounts with a simple system and perhaps the help of a collection agency. Late payments are a hassle, but they can be overcome when you make the right collection decisions.

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