Tips for Debt Collection From Good Customers
What is a good customer, and how are they good, if they aren’t paying the outstanding amount on time? Well, a good customer is a consumer who has always placed bulk orders from you and has made the payment on time. The chances of them placing orders from you in the past are also high. But there has been one instance where they didn’t pay on time or are unable to pay so.
These ‘good customers’ don’t include debtors who are always late in paying the outstanding amount. Or who is not replying to the mail or disappears after availing the service on credit. These customers don’t leave you with any option, other than to call a debt collection agency or going for a lawsuit.
Usually, when a ‘good customer’ falls behind on their payment, there is a genuine reason. That is why, as a business, you have to give them a chance. Also, never involve a collection agency, unless you are sure of their delinquency. The reason why they are not paying can be:
- Either cash crunch, or financial hardship.
- Or it may be that they have long-overdue payments, and they are getting to it one by one. Thus, the amount of time increases.
Still, you cannot ignore a non-paying customer, no matter how good they are. If you don’t get your payments on time, you can face cash-flow issues. Or get into problems with a debt collector, if you have a B2B debt. So, you have to take immediate action. All the while ensuring that you don’t ruin your relationship with your customer.
Here are some ways to do so..
Monitor their paying and financial habits
When deciding whether to start the collection procedure, it is great to look at the paying and financial habits of your customers. If your customers usually pay you within sixty days of availing the service and have not paid for thirty days for the current service; you don’t have to start the collection process. If they go beyond the sixty days, you can send a simple reminder. Most good customers will pay after the reminder, and the reason will be a genuine financial problem. Or they might have forgotten about the outstanding amount.
Change the billing cycle
If a customer has not paid their previous bills on time, but they usually do, you can try changing the billing cycle. At the end of the month, the customer has to pay off a lot of people. So, changing the billing cycle to mid-month can work in your favour. It will ensure that you are on top of their list. Also, you can limit their buying for a while or until they pay off the debt. This way, you will ensure that you get some amount even if not full, and don’t end up ruining the reputation and relationship you have with your customers.
If a loyal customer who always pays on time is struggling to pay you on time, most probably it’s the same with others. Instead of harassing the customer and destroying your goodwill, work out a payment schedule. In this scenario, you provide your customer with extra time for paying the outstanding amount. You can set a date shortly on which they have to pay. It puts you in a good place, as you get the money on time when they are in a better condition financially. Also, you enter their good list, and they will be a loyal consumer. Payment rescheduling works for most of the time, says experts at Cedars business services. Visit their profile now.
If the customer is nearing their sixty-day bill cycle, and payment is still due, direct intervention is best. Don’t remind them through mails or notices, as it points towards legal solutions. The first thing you should do is phone the customer/client or whoever handles the account directly. A direct conversation can solve all issues as you will be able to know their reason and come to a solution favourable to both.
Hire a debt collector
If none of these measures works, and the good customer is close to being a delinquent, hiring a collection agency like cedar business services is your last resort. They are great at recovering outstanding amounts, and you don’t have to lose the rapport. Also, it is better and cheaper than filing for a lawsuit.
Taking a risk is part of running a business, and trusting a good customer is one risk you will have to take. But trusting someone doesn’t mean you have to drop your guard. Be on top of everything, and if you think they are not going to pay, follow the last tip.