Top 5 Methods To Collect On Past Due Commercial Debts
You expect to be paid when a customer transacts business with you in exchange for your products, labor, or services. Most customers do pay. But what occurs if a customer doesn’t pay or pays very slowly? Fortunately, you have choices for stopping late payments and adapting debt recovery strategies to get the money that is owed to you. A commercial debt collection agency can help you recover all past dues and strengthen your customer relationship.
It can be challenging to try and collect money from a non-paying customer. Therefore, it’s recommended to avoid the issue by implementing the following safety measures:
Research the client: If you have never worked with this customer before, learn a little bit about them, so you are familiar with who they are. To find out if they have any complaints filed against them, you can perform a straightforward Google search, go on LinkedIn, or get in touch with the Better Business Bureau.
A written agreement: You should always have a signed, written contract, regardless of the client’s status—even if they are your closest friend or an esteemed corporate executive. The majority of contracts will cover the following:
- Payment schedule
- Preferred payment method
- Scope of work
- Late payment policies
The information must be put in writing. Misunderstandings are less likely to happen if issues arise. For instance, a customer may be more inclined to make timely payments if they are aware that late fines will be added to their bill. If not, interest charges will be incurred. You have no guarantees if you don’t have a formal contract. Outsourcing customer service to a commercial debt collection agency can do all the work for you.
Ask for a deposit: You will have at least somewhat offset the non-payment if you ask for a portion of the payment in advance. If necessary, you might refer to it as a retainer or deposit. In fact, business owners frequently request this form of down payment, particularly those that offer services rather than things. It helps cover the time and expense you invest in the project.
Debt Solutions for Companies
You will eventually have to approach a client who isn’t paying. To do this, you will need a reliable, experienced, and professional commercial debt-collecting solution. When it comes time to collect a past-due debt after taking all necessary precautions, move promptly. Here are some methods for collecting debt that might be useful to employ:
Do a pro/con analysis. You must decide if it is worthwhile to pursue debt collection. You could want to write off the debt and stop doing business with that person if it will cost more to collect the debt than is owed.
Follow up with the client. Some customers are merely sloppy or forgetful. Don’t be afraid to send an email requesting payment in accordance with the contract’s terms. Although it doesn’t excuse a late payment, there are situations when bills are lost; people experience emergencies, etc. Give the client a chance to make things right, depending on your previous interactions with them.
Send them a cordial but firm note or give them a call to remind them of the overdue bill. Make it clear that you want to find a rapid solution to the problem. Asking them now about their satisfaction with the service or product or their need for assistance with the payment process is a fantastic idea. Be prepared to take payment over the phone if this is an option, as some clients will want to take care of it immediately.
Hire a commercial third-party debt collection agency. You might think about working with a third party debt collecting company. In reality, they can provide effective debt solutions for businesses that provide a range of services. The same methods you would use to find other professionals will also work to identify a reliable agency. Ask people in your professional network or search internet reviews to discover a few to interview. Additionally, you can look for businesses that have earned a BBB certification or locate Commercial Collection Agency Association members. Or, to save time and money, just get in touch with Debt Recovery Resources first.
Factoring services. A factoring service, which buys your past-due accounts for a portion of the amount owing, may be an option if you need cash quickly and have a number of outstanding accounts. The business should take over the accounts and advance you the money reasonably promptly. Then, after collecting the debt, they will send you the remaining instalments, less the service charge.
Recognize that you have options, and give Debt Recovery Resources some thought. You must take immediate action if clients are having financial difficulties. There is less probability of retrieving money as debt gets older. Third-party debt recovery agencies are here to help you recover as much as possible. Don’t hesitate to consult with an agency. They will thoroughly evaluate your overdue debt and propose debt collection solutions that work.