No matter what reasons your customers have to delay their payments, you will eventually need debt recovery on your side, in order to avoid cash flow problems. If you have this kind of problems, you will have to take them seriously since it can seriously damage your business. On the other hand, the way you treat your customers will strongly affect the chances of them doing more business with you. That is why you should make sure you recover your debts without generating any hard feelings between you and your valued customer. And here are a couple of ways to do so.
Debt Recovery Before Crisis
Give Your Customer Enough Time
One of the things you should consider is giving your customer enough time to pay off any debt they owe you. There is a time-frame that is considered standard, so what’s recommended is waiting around 30 days before taking any action. If a customer receives a reminder after 30 days of owing a debt they are not going to find you aggressive or impatient. In fact, your customer is probably going to realize that they have delayed the payment for too long and will settle all the debts they might owe you. This is standard debt recovery practice you should follow going forward.
Maintain Some Communication
Another important thing you should do is stay in touch with the customer that owes you money. Still, the communication between the two of you does not have to be centered on the debt. You can simply stay in touch and talk about some other aspects of business. That way you will keep your customer’s mind on their debt without actually having to mention the debt. Once the communication stops between two parties and there is any sort of debt, chances that the debt will be paid become much less.
Once 30 days pass and your customer still did not pay their debts, it is the right time to send some kind of a reminder. You can choose to do this by making a phone call, sending an e-mail or a text message. Sometimes, you customer can forget about the money that is owed to you, due to some obligations they might have. That is why there is no need to panic if your customer did not contact you during the first 30 days. For customers who are overwhelmed with business meetings and obligations, a simple text message should be enough to get them pay back immediately.
Explain How the Debt Affects Your Business
If you have sent a reminder and your customer still did not pay you back, the next thing you should do is try to explain them the consequences of not settling their debts on time. Sometimes, your customer might not realize the importance of paying back their debts and have to be reminded. Explain to them how their debt is slowing down your business and that it may eventually lead towards the downfall of your business. Probably, your customer is going to realize how paying back the debt is for your company and they will act on it as soon as possible.
Turn to a Collection Agency
If your customers are giving you a hard time and are not willing to pay back their debt, you can always consider turning to a collection agency. This is a great way to deal with the customers who are not responding to your calls and do not seem likely to pay you back. Still, it is very important to turn to the best possible agency that deals with debt recovery, in order to avoid losing a large part of the money your customer owed you. The agency will contact the credit bureau and will use a more threating tone with the debtor.
It is important to be polite and deal with your customers in the right way so that they remain willing to do business with you. Though they may not have paid you back on time once, the future income you can make from doing business with them is of great importance for your company.