Collection tips you don’t want to miss

It’s your money, so make sure you get what is owed to your business

There’s nothing worse than a customer that refuses to pay up.
What happens when a customer fails to pay? The potential damage to your business is alarming.

  • You may need to borrow money to keep the business going.
  • You are thrown into crisis mode to figure out how to cover your bills without the anticipated funds.
  • You may become stressed by chasing the receivable.
  • You may have to retire the customer due to non-payment.

While there’s no sure fire method of debt collection, use these strategies to improve your ability to get your money.

First, communicate with your customer

Don’t jump to conclusions. Contact your customer about any unpaid amount that is past due. It may be a simple matter of miscommunication or accounting error.

For example, your sales team may have misrepresented your services and the customer doesn’t want to pay. Or, the product may not have been sent. Or perhaps the customer never got your invoice.

Hopefully, you can resolve the issue and collect payment.

Ask for immediate payment

If there is no dispute with the account, move to collect your money at once.

Don’t extend additional credit to an already late account. When you call the customer, insist on immediate and full payment.

Offer methods of easy payment

To expedite full or partial payment, make it easy for your delinquent customer to pay their account to you by offering these payment options.

  • Accept credit and debit cards.
  • Accept direct deposit to your bank account.
  • Accept e-transfer payment (usually best for smaller amounts).
  • Send a courier to collect a certified check.

If the customer can’t pay the entire amount today, ask for a partial (or “good faith”) payment with the balance to be paid later. Get the delinquent customer to pay something right away and document any subsequent payment dates to satisfy the remaining balance. Send them a written note to confirm the deal.

Stay on top of it

It’s easy to put off the unpleasant task of chasing an unpaid invoice until tomorrow or next week. But it’s important to stay on top of the customer until you get your money.

  • Call every day if you must and ask for payment.
  • Email to follow up your call.
  • Send a formal account statement and include a late payment charge.

Last resort – use a collection agency

If the customer won’t return your calls or emails, and the account is seriously overdue, it may be time to bring in a professional collector.

A collection agency knows the legal process to get your money. They will likely possess more experience at collecting receivables than you do. And, if you are concerned about maintaining a relationship with the customer, hiring an agency will help you to keep the collection process at arms-length.

Agencies collect their fees in different ways – you can expect to either pay a percentage of the money collected or a flat rate for their services. In some cases, the collecting agency will offer to buy the debt from you for cents on the dollar and pursue the debtor on their own.