At Commercial Domestic Investigations, we have spent a lot of time talking about the negative effects of late payments on your business; you can even lose customers over unpaid invoices. But what do you do when one of your most valuable customers misses a payment?
Of course, all of your clients are valuable and to lose any of them would be a massive blow. However, some customers may have been trading with you since you began, they may regularly spend a lot, and they recommend you to a lot of other people. To lose these customers would have a big impact on your business, it’s important to weigh up the value of each customer when they fall into arrears.
When a payment due date passes without payment being made, you’re faced with two options. Tread carefully and ask politely for payment to be made and then sit and hope that they make a payment, so you don’t have to be any firmer or opt for a more assertive approach and risk damaging a relationship that you have spent years nurturing.
You have a few options to choose from when deciding how to recover an unpaid debt from a valuable customer. Make a phone call to the client, if you have spent time building an honest and open relationship, then a polite courtesy call to explain that their payment is overdue may be enough to resolve the problem, especially if it was just an honest mistake. It may be that your customer is facing some financial difficulties, in which case you may come to a payment agreement
While you may not want to, taking a firm stance when it comes to late payments is an effective way to resolve the problem. Clarify your procedure and what further action you will take if payment is not received. It is not necessary to be aggressive, remain polite but firm.
Consider outsourcing your credit management to a third party, like Commercial Domestic Investigations. Sometimes just the suggestion of using a third party is enough to encourage a customer to pay. If it isn’t then a third party can professionally and tirelessly recover any debt owed to you, in-line with regulation and protocols, while you focus on other tasks.
A more serious option is to take things down a legal route. You should think carefully before taking things legal; it can mean permanently damaging a relationship, so you need to be willing to take that risk. Although the thought of facing legal action is enough to persuade the customer to pay, if they don’t you will need to be prepared to go to court.
Usually, a loyal customer is exactly that, and the majority will have a valid reason for not paying on time, sometimes all it takes is a polite courtesy call to remind them of the invoice. If that doesn’t work then remind them of the agreement that they (should have) signed and that steps that you will take if payment is not received. If that doesn’t work, then you need to seriously think about how valuable the customer is to you, if you really don’t want to lose them then consider outsourcing the debt to a third party. At Commercial Domestic Investigations, we handle every debt professionally and in-line with industry regulations to maintain your client relationships. If the debtor is a regular customer but continues to miss payments then are they really of any value to your business? With these types of clients, you may want to consider requesting payment or a deposit up-front.
Unfortunately, there is no simple way of guaranteeing payments will be made on time. The true test of your business will be how you deal with these late payments. Continuous communication between you and your clients can go a long way to keeping those valuable customers valuable. If your business needs help collecting late payments, get in touch with Commercial Domestic Investigations on 08444 159200, use our online contact form or email firstname.lastname@example.org.