Sometimes, clients may not be able to pay the money they owe your company on time and this will cause financial setbacks and other problems. Accumulating overdue payments is one of the many issues that you, as a business owner, dread to deal with. Collecting money has to be done with care, so that the client will still do business with you. Follow the tips below to collect overdue payments without straining your relationship with your client.
What you need:
- Contact number or information of the client
- Competent communication skills
- Persistence, tact, and a bit of patience
Contact the client
Firstly, get in touch with your client and inform them about the payment that they owe your business. Give them a quick call, send them an email, or send a letter to get their attention and to remind them. If you have sent an invoice to them, inform them about that and confirm whether or not they have received it. Be polite while dealing with the client. Be assertive, but not confrontational while convincing them to pay up.
Make use of your company’s standard payment policy
Having this agreement with your client will make things easier for you to convince them to pay up. You can use this as leverage when dealing with your client, because the policy will most likely state when and how you would like to be paid. Be sure to highlight this agreement when convincing your client.
Wait for their reply
There is a limit to how much you can wait for the client to pay you. There can be a 15-30 day grace period for the client to pay, but any more than that you have you to be more assertive when you try to contact the client again.
If the client is still unable or unwilling to pay for their share of the bargain, then you can make use of the following methods. But be warned that using these methods will most likely strain your relationship with your client.
Hire an attorney
Seek legal counsel if you need it, but only as one of your last resorts. Follow their advice in whatever action you want to take and keep in touch with them in case you need to take this issue to court.
File a claim
Use this method if your earlier attempts fail to convince the client to pay you. As long as the payment is not a large amount, you can settle this issue in a small claims court, even without an attorney. Be sure to follow court instructions, answer promptly to its requests, and prepare all your necessary documents (e.g. copies of invoices and emails to client).
Hire a collection agency
You can call on outside help to assist you in collecting payments, but only if you plan to use it on your least valuable clients. Collection agencies tend to use more assertive methods and can be less tactful in their negotiations. If you plan to do so, make sure that the agency that you will hire is creditworthy, reputable, and long established.
Be sure to be careful and ever tactful to your clients when asking for their late payment, and utilize those last resort options only if necessary.