How to handle clients who miss their payments

Dealing with delinquent accounts can be quite the headache.  You have bills to pay and to salaries to hand out while your client misses their payment for the third straight month.  Sadly, this is a common occurrence.  According to the Credit Research Foundation through the National Summary of Domestic Trades Receivables, 87% of all accounts are current and .04% are 90 days past due.  The longer it takes to collect, the less likely collection will happen.  So if you have problems collecting from delinquent clients, here are some ways to handle them.

The first thing you should do is to prevent the account from being delinquent in the first place.  You can do this by following-up on invoices before they are due.  This is a good move for clients with histories of delinquency.

Offering different modes of payment could aid clients in making payments, and could also preserve business relationships with them, if this is the desired outcome.  If you restrict forms of payment to wire transfers, clients could have a hard time procuring the amount if their funds are not well-maintained.

If a client is past 90 days due with their payments, it is highly advisable to hire a debt collection agency to settle the account.  These professionals have years of experience in dealing with delinquent accounts.   It will also demonstrate to your client that you mean business and could provide a wakeup call with regard to their relationships with their suppliers. 

Brennan & Clark is a business collections firm that has been around for over 30 years. The firm’s combined experience and expertise enable the company to guarantee higher average recovery rates than the industry average. Visit this website to read more about debt collection.

Handling Chronically Delinquent Clients: Tips For Small Business Owners

Unlike most clients that are sometimes late in payments for legitimate reasons, chronically delinquent clients habitually pay late, pay rarely, or in some cases, never pay at all.

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Serial late-payers are the bane of businesses of every size. Delinquent accounts, however, are a particularly serious problem for small businesses. Having enough habitually delinquent customers compromises a small business' cash flow. To make matters more difficult, small businesses rarely have the tools and expertise needed for collecting on delinquent debtors.

The following are some tips for small businesses dealing habitually late-paying customers.

Have a process in place

No matter how small a business is, it must develop and follow a clearly defined set of policies for late-paying customers. These procedures must include details such as payment deadlines, late fees, and frequency of payment reminders.

Note that there shouldn't be a one-size-fits-all approach to all late-paying customers. A customer who regularly pays on time but forgot to drop a check in the mail for the last bill is dealt with differently than a customer who has never paid on time.

Communicate well and often

Businesses must invoice their clients on time, and clients with a history of late payments must be contacted on the date the payment becomes overdue, preferably over the phone or face-to-face instead of through email or regular mail.

Business owners should calmly yet clearly inform a late-paying customer about the overdue bill, ask for his reasons for paying late, and ask him to commit to paying the amount owed at a date both parties agree upon.

Consider hiring a collections agency

If a client refuses to pay or ignores all attempts at communication and negotiation, and his or her account is past due by more than the acceptable amount of time, business should consider hiring a collections agency. Taking a client to a small claims court can be time-consuming and costly, whereas collections agencies take care of the legwork when it comes to chasing after late-paying customers.Collections agencies allow businesses to get on with more pressing matters while recovering delinquent debts.

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Collections agencies are typically paid either a percentage of the debt recovered or a standard amount of commission for certain types of debt. Others charge monthly rates, while others offer the same services for a flat fee.

Brennan and Clark offers customized account receivables support solutions that eliminate credit losses. To learn more, like this Facebook page.