Running a successful business is an engaging task that involves a cohort of several aspects. However, the most important activity is providing valuable goods or services in exchange for some money from your business and individual clients.
If you rely on an invoicing system for sales, it’s highly likely that you’ve dealt with the inconveniences of late payments as well as defaulted payments. While there are tons of reasons that lead to hiccups in invoice settlement, unpaid accounts are bound to constrict your cash flow. As a business person, this is definitely something that raises your concerns.
To receive the cash from the client, it’s important that you take deliberate action. Nevertheless, this doesn’t imply that you become cruel and aggressive. This article seeks to show you how to recover your money in an effective manner and ensure you maintain the customer.
Contact your clients to remind them about the payment in a friendly way
When you realize a client is running late on payments for goods and services delivered, the most appropriate step is contacting them with a polite reminder. At times, this may be all that you need to get paid. The client may be having a small problem with incorrect account details or forgotten the invoice and these are things you can iron out in a few minutes.
In your reminder message, always make sure you have forwarded the correct payment details so that your customer can act quickly. If your client doesn’t respond to the first reminder, it is prudent to reach out again with an overdue payment reminder. At all times, maintain a professional and friendly tone.
Make direct contact with unresponsive customers
When you’ve sent a client multiple reminders without positive progress, it’s time to get in direct contact. Here, you can either set a date to visit the client at their premises or make a call if the previous modes of communication were written forms.
If the meeting is successful, you will not only get paid but the client will lean towards better business relations. Nevertheless, some clients may be uncooperative despite your previous attempts. If this happens, you might want to consider sending out a demand letter.
You must be careful with demand letters and it is best used as the last line of defense as far as communication is concerned. This is because it may ruin your relationship with the particular client.
If you your clients owe you a lot of money that may adversely affect your business, it can be great if you considered a business line of credit. Among the customers owing you money, there are those that will pay eventually. Therefore, taking a nation 21 installment loan can solve the cash flow problem while the receivables are pending payment.
Seek the services of a debt collection agency
If the client hasn’t paid your money, getting help from a debt collection agency may be a good idea. However, it is always wise to use an agency that embraces good debt collection practices. This means you also need to study what is considered as good collection practices to ensure that you don’t violate the rights of the client.
This option is great when it comes to saving money and executing the task with outstanding efficiency. In addition, it keeps your hands clean from any legal tussle that may ensue.
Before settling for a debt collection agency, you might want to dig a good deal of background information to make sure they are legit. At the same time, work with a partner that charges a reasonable fee for the collection services. Nevertheless, you must first consider the total amount owed to your business before resorting to collection methods. Of course, it doesn’t make business sense to use an agency to collect $500 when the charges for the service are $1000.
Avoid harassment by all means
Harassing a client just because they owe you some cash won’t make things any better. When collecting your debts, you need to embrace persistence during the process. However, the line between pestering and constant reminders can get quite slim.
In a nutshell, being persistent involves reaching out to the client with a polite reminder at 1-2 week intervals and giving them different options to settle the outstanding balance. On the other hand, harassment is making daily calls to the client at odd hours and yelling at them.
Don’t write off the debt if you can settle for less
If a client owes your business about $15,000 and you’ve constantly tried to recover the money for several months without any success, you might want to consider taking what’s on the table. In case you run out of the viable humane options and you fear losing the entire amount, try offering the client an option to pay a partial amount and have the remainder forgiven.
It goes without saying that bad debts are a nightmare to small business. Nevertheless, chances are high that your client is also stressed by the debt owed to you. As such, any reasonable client will gladly accept an offer to pay a part of the total debt and have the other portion written off. In any case, you were prepared to write off the entire loan and move on but if you can get a small portion, you’ve recovered something.
The bottom line
Truth be told, debt collection isn’t an enjoyable activity and it can make you experience all sorts of mixed feelings. Nevertheless, your business needs the money to stay afloat, therefore, ensuring that clients settle all invoices is of utmost importance.
To make sure that your clients pay on time, always ensure you’ve laid out the terms of payment before doing business with any client. This way, they’ll know exactly what to expect. However, writing off some debts is something you have to deal with sooner or later. By using the tips discussed here, you can ensure the invoices are paid while maintaining a healthy relationship with clients.