Many of us have been faced with the problem of a client who simply does not pay their bills on time. We, of course, take pains to ensure that our own payments, deliveries and/or services are not late. This makes the situation of a delinquent bill not only monetarily frustrating, but difficult to understand. However, if we can remain calm and carry out a few simple steps, these problems can almost always be resolved with little fuss.
1.) Remain professional
Especially for a small business owner, who may not have sufficient capital to sustain many clients indebted to them, this can be a difficult situation. However, it is important not to panic, or worse, become angry. These emotions, if conveyed to your client, will simply cause them to become defensive.
2.) Contact the client promptly
Once you have cleared your head, it is important to communicate directly with the client. People are used to deleting emails and recycling notices, but they cannot ignore a phone call with another human being as easily. This offers an opportunity for you to communicate openly with your client about the problem. Do not come on strong. Most people are essentially honest, but often avoid confrontation about debts. Having a frank conversation about the hold-up can help you get to the real heart of the matter.
3.) Offer a partial payment option
Some money is better than no money at all. If the client simply does not have the funds, offer to take part of the sum now and allow them to pay the rest later. It is better for the client to get back into the good habit of prompt payment than for you to receive the total amount. You are much more likely to get the rest later if you are willing to compromise now.
4.) Follow up on broken agreements
The new due date has come, and no money has arrived. You now have a clear understanding of your client’s character. The time has come for decisive action. Obviously, you must cease providing your goods or services to the client immediately. However, without filing a claim in court, you will not have the leverage to blacken their credit appropriately. If you have the resources, hire a collections agency. Claims between $1,000 to $50,000 form a majority of collections agencies’ work. The younger and smaller your claim is, the more likely you are to eventually be able to collect on it. Talk with your compatriots in your industry for a good reference to a reputable agency. You may also consider Small Claims Court if your client owes you less than $5,000.
5.) Establish a sound credit policy
Conflicts are best resolved by anticipating the conditions where they might arise, and planning accordingly. Being prepared for potential problems prevents you from being caught off-guard. That is why establishing a good credit policy is your best defence against delinquent payments. Have thorough credit information on clients before extending them credit, especially for newer and unproven businesses. Use detailed invoices that require a signature, and require that problems in delivery of service be reported immediately. Maintain thorough credit records in your home office. These are all essential components of a sound credit policy.
However, there is one lesson that is more important than anything else that you might get from these few pieces of advice. Keep a frank dialogue open with your clients at all times. Communication is key to an honest and healthy working relationship, and allows you to nip credit problems in the bud before they’ve grown beyond your control. This kind of direct connection with your client base will not only make it easier to resolve credit issues, but will make business more pleasant and professional all around.
Author bio: Amie write on behalf of Clickinks.com. In her spare time she enjoys reading and writing about design trends.