Avoid These 9 Mistakes When Collecting Payment
As a debt collection agency with over 20 years of experience, we understand that many business owners must deal with unpaid invoices. While some are successful at recovering revenue, others fail to collect what they’re owed because of the errors they make during the debt recovery process.
There are many ways you can improve. The first step is to know where you stand. You can use our accounts receivable aging calculator to check if you have a healthy A/R turnover ratio. It’s also important to avoid the following mistakes:
Mistake 1: Not Sending the Invoice on Time
Don’t give your client a reason to pay late. Deliver your work on time and communicate openly to avoid problems later. Take it in stride if you have a discourteous client and don’t let anything affect the quality of your product.
Once your product is delivered, send the invoice. Specify the payment date. Many customers end up paying late because they weren’t billed on time. You can use scheduling software to help you bill your customers on time.
Mistake 2: Making Billing Mistakes
Trust is an important component of doing business. Go over your invoice with a fine comb to ensure that everything is in order. If your invoice has mistakes, valuable time may be wasted while a customer asks for corrections. This will also cause the customer to be more circumspect in the future, resulting in slower payments down the road.
Hire accountants to improve the efficiency of your financial department. Have your staff learn the latest top-of-the-line accounting software to avoid billing mistakes. Remember, such errors can go both ways. You may end up charging a customer less than what they owe. Such mistakes are harder to correct because customers usually assume that it’s a discount.
Mistake 3: Avoiding the Details
With free invoice templates available online, there’s no excuse to send invoices without itemization. Even if the total amount is correct, many customers want to see itemized service breakdowns. It will help them track costs.
Mistake 4: Not sending reminders
If your invoice isn’t paid on time, send a reminder. Sometimes an invoice can be forgotten in a busy billing department. It’s usually best to remind them by email, however, sometimes a phone call is necessary.
Mistake 5: Not Maintaining a Record
It’s important to maintain a record in case there’s a dispute later. It will help you legally if everything is documented. Try to communicate with your customer via email rather than phone. If your customer has a complaint on email, try to address that concern on the same medium. Also, make sure that you both sign a contract that mentions all terms clearly and concisely. This can be helpful to both parties in case of a dispute.
Mistake 6: Ignoring the Warning Signs
Although most customers are good reliable people, a small minority simply never intend to pay. Even if you’ve conducted background checks, spoken to references, and incentivized payments, you may have the misfortune of matching with such a customer.
Be cautious around customers who quibble every step of the way after the contract is signed. Such customers may be looking for ways to renegotiate payment. Likewise, be wary of customers in financial difficulty. Companies with cash flow problems will find it harder to pay their invoices on time.
Mistake 7: Panicking
If your payment is overdue, the worst thing you can do is to panic. Don’t harass your client with many emails and phone calls. If your email is ignored, simply follow up with a polite phone call. Sometimes a busy accounting department may miss an invoice and a polite reminder will get you paid.
Remember to remain professional. Threats and aggression are usually counterproductive. Your customer will be less inclined to pay you or do business with you in the future if they feel harassed. Moreover, it can affect your reputation in your industry. In the digital age, a few negative reviews can greatly impact a business’s profitability.
As the nation’s most trusted business to business collection agency – we know that a diplomatic approach to debt collection is more effective. At Summit A*R we boast a recovery rate that’s twice the national average across a variety of industries. One of our secrets is our “P.H.D. Philosophy” (Preserve Human Dignity). We achieve results by handling accounts with sensitivity and compassion.
Mistake 8: Wasting Time
Although it’s a bad idea to panic, it’s also inadvisable to waste time. Debt grows harder to recover as it grows older. If your debtor is in financial strife, then it’s important to get paid before their other creditors reach them. And if they’ve been ignoring your invoices, reminders, and phone calls, despite being able to pay, then they’re unlikely to clear their dues without our intervention.
Our campaign of demand letters and phone calls are usually enough to recover payment because of our reputation as a premier collection agency. Stubborn customers pay when they realize that their credit rating could be adversely affected. Unlike your in-house collections department, we can report consumers and businesses to credit agencies.
With so many overheads, your business needs to have a healthy accounts receivable turnover ratio. You can easily improve your business stability with our collection services helping you recover revenue from consumers or other businesses. Our long-term staff of trained and licensed collection professionals are experienced at recovering debt across a variety of industries without using robocalls, threats, and other aggressive tactics.
Mistake 9: Giving Up
While debt certainly becomes harder to recover with time, you should never give up. Even if the debt is getting older, get in touch with our team of professionals at Summit A*R. Our track record includes the recovery for some particularly difficult debts.
If your customer has skipped town, we can find them and their assets through our skip-tracing department. This team has cutting edge resources and is run by a licensed private investigator. Once they’re located, we begin the debt recovery process.
We also offer litigation services to recover revenue from difficult-to-collect accounts. Our qualified legal team performs a cost-benefit analysis. If legal action is feasible, we can file a lawsuit with your written approval.
These are nine mistakes you should avoid when recovering a debt. Remember, it costs nothing to call us. Get in touch with Summit A*R for expert advice from our collections team. We work on a contingency basis. We don’t demand anything upfront and we don’t get paid unless we recover your revenue.