As the owner of a business, you won’t be surprised to learn that statistically, many customers don’t pay on time. There are a variety of reasons for this, and not all of them are related to finances. The same strategies that work for one client may not work for another, even if the situations are nearly identical.
To improve your debt recovery process, start by gauging the urgency of your invoice resolution process by your in-house collections team. You can use some of the financial calculators on our platform for help.
- Day Sales Outstanding Calculator: Use this tool to get a better picture of the effectiveness of your credit and collection policy’s effectiveness.
- Accounts Receivable Turnover Calculator: You can use this important tool to check how quickly your invoices turn into actual money.
- Accounts Receivable Aging Calculator: Use this useful tool to check your company’s percentage of seriously delinquent receivables.
- Days of Inventory on Hand Calculator: This calculator can help you determine how quickly your accounts are being monetized.
At Summit A*R, we’re a premium commercial collection agency with over twenty-three years in the debt collection business. Over the years, we have helped many businesses successfully collect debt from other businesses and consumers. From our experience, we know that different delinquent customers can require different strategies for a successful collection.
If you think your accounts receivable turnover ratio is lacking after using our financial calculators, then consider using our corporate debt collection services to convert your unpaid invoices. Not only are we highly effective with twice the national recovery rate across a broad range of industries, but we take a stern but diplomatic approach to debt collection. Our approach helps you preserve your valuable business relationships and your reputation.
One of the reasons that we’re so effective is that we have successful strategies to deal with various types of accounts.
#1 The Careless Customer
Customers that are simply disorganized usually want to pay on time but can’t seem to keep track of their business, including invoices. If your client has been missing meetings, failing to respond to emails, debating the terms they agreed upon, and asking you to resend the voice, then they’re either stalling or careless.
In either case, it’s important to get in touch with Summit A*R immediately for help. We have developed a strong reputation in the debt collection business. Usually, when a disorganized customer receives an official demand letter or phone call from a professional, courteous, yet serious member of Summit A*R, they pay off their dues. Most customers don’t want a situation to escalate when an official debt collection agency is involved.
To deal with disorganized customers, stay organized. Use a watertight invoice and try to keep some communication on email to maintain a record of your interactions. Sometimes, a disorganized customer can be motivated to remain organized when the contract incentivizes timely payments with early payment bonuses and late payment fees.
Also, remember to send invoices on time followed by polite reminders on email and phone. Consistent communication can help turn your careless customer into a considerate one.
#2 The Customer in a Temporary Financial Bind
How you deal with a customer with cash flow issues can depend on your relationship with them and the depth of their problems. If it’s a longstanding customer, then you may consider giving them more time, forgoing the late fees, converting the invoice into a payment plan or offering a small business loan service if your fiscal health allows. If it’s a new customer, then it’s important to let them know that you mean business.
In either case, we can help. Our ability to deal with different types of customers will help you recover your revenue and preserve your relationships.
To protect yourself from such issues, remember to conduct financial checks before extending credit, ask for references, and collect deposits from new customers. Avoid extending credit to potential clients that fail your checks.
#3 The Customer in a Big Financial Bind
It’s advisable to keep one ear to the ground. If intelligence suggests that your customer is in a serious financial bind or is about to go out of business, then adopt a more urgent strategy. Your demand letters and phone calls should have a more serious tone with such customers.
Don’t take a risk. If the account is in trouble, then reach out to Summit A*R before it’s too late. If invoices remain unpaid, their orders have become unpredictable, purchasing has stopped, their staff is disgruntled, or if they also owe others money, then time is of the essence. Remember, debt grows harder to recover with time. You don’t want to be beaten to the punch by other creditors.
At Summit A*R, we’re proud to say that over the years, we’ve recovered some particularly difficult debts. Aside from a team of experienced, licensed and professional debt collectors, we also have a skip tracing team led by a licensed private investigator and a full-service litigation program in affiliation with attorneys.
#4 The Challenging Customer
If your customer has been challenging from the start, nitpicking throughout the process, making unreasonable demands, and breaking promises when the invoice is due, then their behavior could be part of a strategy. Such customers can be extra picky to avoid paying all or some of what they owe.
A strong screening process, detailed invoice, late payment fees, timely invoices, and a record of communication can help you deal with such customers. Many frustrated businesses simply write off the debt and blacklist such customers after their invoice resolution process has failed.
This can be a mistake.
At Summit A*R we can convince such customers to pay their debts. Unlike your in-house collections department, we can report consumers and businesses to the major credit bureaus. People and companies often clear their debts to protect their credit rating.
If your customer is genuinely unhappy because of a mistake you made, then it’s important to apologize immediately and offer them an incentive to continue the business relationship. Afterwards, review and improve the products and services that left them dissatisfied to avoid such problems with them and other customers in the future.
These are some common types of delinquent customers. As a business, you’ll deal with all sorts of unpaid accounts. The best way to improve your accounts receivable turnover ratio is to partner with an experienced debt collection agency like ours.
Categorised in: Our Blog
This post was written by Summit A•R