Ever found yourself frustrated by a customer who just doesn’t seem to pay on time? After all, you thought your terms of payment due in 30 days was pretty fair. Yet, as you check the mail, again, you wonder how can it be so difficult? You think, maybe you are overacting and should just give them a little more time….well think again. Studies have shown that after 90 days, the chances of you collecting an account drops to 72%, down from 94% after 30 days. After six months, its down to just 58%.
What can you do? You could:
Give your customer a friendly courtesy call reminding them their account is past due. Almost 80% of late payments can be resolved by simply picking up the phone and giving them a call. If you find out they are having cash flow problems, see if you can work out a payment plan that works for both of you. Once you’ve hashed out a plan, write it up and have the customer, as well as yourself, sign it.
If that friendly call doesn’t jar them to action, send them a past due notice. How strong the language should be depends largely on your previous attempts to contact the customer and your relationship with them. Clearly state what will occur next if you do not receive payment.
If all else fails and you have tried everything in good faith to collect your money due, you can always head down to your local small claims court. However, if you travel this road be sure that you have a solid contract between you and your customer and a record of how and when you tried to contact them for payment.
Finally, consider whether or not your customer even has the money to pay you. If you have information that leads you to believe they don’t, you may want to reconsider the time and money you’ll have to shell out in order to collect via the court system. Ask yourself is it really worth it? This might prove to be the hardest question to answer, and you might say “its the principal of the matter”, but unless you have the extra money for filing and the time to prepare and go to court, it may not justify it.« Return to all articles