Go after bad debts without ruining the good vibes

customer-relations

Reminding your customers to pay their bills is the right thing to do, but it can be an awkward task. Bungle the message, and it’s sure to damage the relationship. Still, in any relationship, setting expectations of the other person is always the healthy thing to do. For you, that means setting the expectation that the customer will pay for your services. And there’s a way to send that message to customers without making you feel uncomfortable. After all, you have a business to run. Here’s how to ask for payment and resolve late accounts without killing the good mood.

Keep late accounts on the radar

When the due date comes and goes, follow up quickly. Otherwise, that payment will fall to the bottom of your priority list and your customer’s, too! It’s a classic out-of-sight, out-of-mind scenario. Keep a daily list of new past-due accounts, have a plan to follow up, and keep all late accounts on your radar.

Facilitate a friendly follow-up

When it’s time to follow up, it’s important to go in with a positive mindset. There might be a legitimate reason for being past-due. Think of this as your opportunity to find out why, so you can help. Whether you’re calling, emailing, or mailing a past-due notice, here are some guidelines for that first contact:

  • If you’re making a phone call, verify that you’re talking to the correct account holder. (Don’t reveal you’re calling about a past-due account until you’re sure you’re speaking to that person.)
  • Keep the tone friendly and open. Use gentle but straightforward phrases like, “I’m just getting in touch to remind you that payment was due on May 18.”
  • State when the invoice was sent, how it was sent, and the amount due.
  • Close with a request for the payment, and ask if they can make it today.

Pause, listen, solve

Leave an opening for the customer to respond. When they speak, listen. This is their time to fill you in on whatever is preventing the payment. Maybe they need more time. Maybe the service wasn’t performed as expected. When it’s your turn, start by summarizing what they told you to demonstrate that you understand and empathize, and then offer a solution. You might offer an extension, a payment plan, or even a discount. Then, follow that up in writing.

Ease into a sense of urgency

At this point, chances are high you’ll get paid. But if they still fail to come through, then you can use a firmer tone when you follow up: It creates a sense of urgency and sends the message that you’re serious about getting paid for your services. Other ways to send the message:

  • Issue interest or late charges.
  • Discontinue services until the account is current.
  • Send the account to a collection agency.

When a customer is late, it’s important to still treat them with courtesy, fairness, and dignity.

How do you build a billing and collection system that accomplishes all three, while also improving your financial outcomes? You’ll want to read our free ebook: A Handy Trail Guide to Faster Payments and Increasing Cash Flow. Download it today.

About the Author:

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.