Every business deals with the occasional late payer. Sometimes they’re a few days past-due, sometimes they can’t pay for months. Sometimes, when you make them aware of the lateness of their account, they jump right on the issue and resolve it. Other times, they actively avoid your calls and letters, requiring additional effort on your part, or even the services of a collection agency. But you can avoid most of these situations and ensure that you get paid on time by following a few solid strategies, which we’ve outlined below.
Sticker shock is an easy way to create a bad consumer experience. By appropriately outlining the cost of your goods or services beforehand, you can create clarity with your consumers. They can, in turn, be financially prepared and determine whether they can afford to work with you. Making sure the consumer can pay in advance of doing business with them is always a good policy.
Enforce Your Financial Policy
Most businesses have an office Financial Policy that says how they will accept payments, whether they finance, and what happens in the event of nonpayment. A Financial Policy will help promote stability in your office, giving your staff guidelines that are clearly spelled-out. Don’t have one? Talk to your attorney to develop one. And then, once you have one in place, makes sure your consumers get a copy when they engage your business. Also, make sure your front and back office staff is aware of the Financial Policy and how to enforce it. Moreover, stick to the policy at all times, making exceptions only in rare, extreme cases.
Use an Ironclad ContractHaving a contract that spells out the specific arrangement between you and the consumer is a necessary step. When your consumers agree to the goods or services received, as well as the arrangement for repayment, and do so in writing, you can avoid dispute situations later on. They won’t be able to say “I didn’t agree to that” because you’ll have it writing, and their signature on the contract to boot. Having a contract on file also helps should you need to send a consumer to collections, obtain a judgment, or otherwise prove the validity of the debt.
Accept Electronic Payments
Making it simple for consumers to pay is a no-brainer. Why would you ever want to make it difficult for consumers to pay? Whether you have a Square Reader, Verifone card reader, or a smartphone payment app, it’s a good idea to have a piece of modern technology or software in your office. Many millennials and folks from Generation Z don’t carry cash and wouldn’t bother walking around with paper checks. If your consumers are streamlining and digitizing their payment options, you should too. By not modernizing, you increase the likelihood of nonpayment.
By implementing these strategies in your office, you’re not only protecting yourself from nonpayment later on, but you’re creating a consumer experience of clarity and ease. The cost, terms of repayment, and payment options themselves should be crystal clear. Still, no matter what steps you take to prepare for the potential of past-due consumers, a few will always occur. In those rare situations, a collection agency is recommended. However, the steps outlined above should reduce the need to engage in collections.
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About the Author: Brian Eggert
Brian Eggert is a business development specialist and writer for IC System, one of the largest receivables management companies in the United States. With 18 years in the collection industry, Brian's experience includes operations, client service, proposal writing, blogging, content creation, and web development.