John Trizzano, Operations Director at AccountsReceivable.com (2009-present)
Répondu il y a 15w
Successfully recovering past due accounts is in important part of any business. Using a professional debt collection agency will increase the likelihood of recovering. While there are many collection agencies, using a reputable agency that has experience and is licensed and bonded is going to be the best direction to go.
Collection Agency | Accounts Receivable has been collecting debts for various industries for the past decade. Debts are collected on a contingency basis meaning that if we do not collect, clients do not owe us anything. If you have money owed to you I would suggest you contact us at 321–710–3530 to discuss your claim so we can advise you the best course of action for a recovery.
José Manuel Dias Cardoso, M.S. Applied Mathematics, Universidade Portucalense UPT (1988)
Répondu il y a 15w
Pay attention to the cusomter risk profile before issuing the invoice.
After issuing the invoice and delivering the merchandise, the time to collect the past due invoices depends on the law applying to your country.
If the amount is less than the cost to ask for the receivables in court you waive the invoice amount and customer balance.
Répondu il y a 14w
Handling late payments is never easy; finding the right balance between being firm enough to protect your business interests and accommodating enough to earn a strong reputation among your customers is an art. It’s a mixture of soft skills, hard policy, and rigorous account tracking, but if you have the right system in place collecting payments can be close to painless.
If you aren’t using a digital payment processing system, that’s a great first step. Keeping clear records and tracking when and how customers make payments in important, especially if you end up in small claims court.
The Process Itself
If you don’t have a system in place and want to move beyond general advice, here’s a generalized model that you can build on to develop a late-payment system. It isn’t perfect for every situation, but it’s a great starting point. As always, your starting point should be a clearly documented work process and a work contract that’s been verified by a lawyer.
Termes de contrat
In your contract’s payment section, explicitly define the accepted payment methods, to whom/where the payments are made, for how long after the invoice date payments are accepted before fees kick in.
For the section describing the late-payment fees, use a simple plain-language structure; typically an additional percentage of the outstanding principal added-on each month. If you have any differences between your payment collection systems (normal vs. late payments) make sure it’s explicitly defined. When it doubt, simple systems are the best.
The Contact Cycle
When a client’s account turns delinquent, it’s important to avoid being too prompt when starting the contact/collection cycle. Contacting them the week they go delinquent gives the appearance of a grace period; contacting them the hour they go delinquent give the appearance of desperation and needlessly aggressive policies.
Email is a safe choice for your initial contact with delinquent clients, however you should be prepared to escalate through multiple contact methods should they fail to respond. Phone calls are by far the most personal contact method, however they’re also the hardest to verify should the conflict come to a legal head. Certified mail is the most traditional and most traceable way to issue delinquent payment notices. Showing up in-person is almost always a bad idea.
Handling Negotiation Attempts
Often times, delinquent clients will attempt to avoid payment by claiming insolvency or challenging the invoice structure. In some situations, the most viable way to assure payment is to transition their standing invoice into a payment plan that, with additional contractual support, ensures that the client will supply at least partial payment.
Whether or not you offer a payment plan depends on the situation, however having a defined contractual system for that payment plan is important. By formalizing the process you’ll maintain professionalism and prevent your clients from abusing your good will. Above all, get it in writing.
Make It Explicit
Beyond the specifics of your system, you need to make sure your customers can see it and understand it. Making sure your customers understand your policies before they sign the contract is a key part of contract compliance, independent of the terms themselves.
On the flipside, starting your quote/inspection process with an extended lecture about payment policies and late fees is an easy way to turn away potential customers. No one wants to feel like they’re being judged, especially when that judgement is rendered by default. If you make your potential customers feel like they’re delinquent before the job has even started, you’ll be starting off on the wrong foot.
Your best choice is to build your explicit payment-process conversation around the positive things you offer – remote payment processing, online payment methods, etc – and include the punitive elements in the positive pitch. Use non-accusative language and emphasize that the late payment system is automatic, focusing more on the positive side of the payment window and payment options instead of how much the late payment fees will cost them.
Get It In Writing (Again)
You can’t hold your clients to a payment system they didn’t agree to. If you’re changing (or instituting) a formal late-payment process, make sure it’s reflected in the service contract your customers sign.
Keeping track of your paperwork can be hard when you’re running a small business, so it’s a good idea to use a digital contract management system. When you do encounter a customer who tries to fight an invoice or issue a chargeback, a bulletproof contract system is your best defence. Don’t bury your payment terms in an obscure part of the contract; make them clear, explicit, and easily interpreted.
It’s also important to ensure that the terms of your contract (and thus your late-payment process) are legally binding. Take the time to talk to a lawyer, and make sure your contracts comply with state and federal law. The up-front cost is well worth the longstanding protection, and it can save you a nasty court conflict if a client refuses to pay.
Garde ton calme
The most important part of dealing with your customers is staying professional. Even when you have the right contracts and the right pitch, losing your cool can jeopardize the payment collection process. Making your clients feel threatened or escalating the emotional conflict to the next level is an easy way to push a payment permanently beyond your reach.
Getting into an emotional conflict with a bad customer can earn you bad reviews and a worse reputation, as it goes directly against any professional image you may have. Any kind of personal insult or attack issued by a business reputation will quickly be amplified across social media.
When in doubt, fall back on your payment collection process. Have email or letter templates prepared in advance, and take time to cool off before making phonecalls. Fall back on procedure instead of anger when customers are reluctant to budge.
The Bottom Line
At the end of the day, having an explicit late payment system will help you stay on top of your invoices. Relying on memory and off-the-cuff decision making when dealing with delinquent clients is an easy way to find yourself in the red. You won’t be able to recover every invoice, and taking someone to small claims court can be a fruitless process, but having a system to fall back on when dealing with frustrating customers is invaluable when you’re juggling the work that comes with running a business.
So how do you make sure you get paid by your clients on time in the future?
1.) Get it in Writing
Money can cause even the most honest people to twist arguments to their advantage. Make it very clear with a signed document whenever possible. This way you can always reference the document’s payment terms. No confusion. No questions. No mess.
We’re not referring to the missed payment, but instead the payment terms. If the client wants 30 days to pay and you want to give them 15, settle somewhere in-between. This makes the client feel like they’re part of the process, and once you settle on terms, it becomes crystal clear that both sides agreed to payment terms. When the client does not hold to them, you can reference your negotiations.
3.) On the spot invoicing
The best way to get paid quickly is to invoice the customer on the spot with an option to collect payment via cash, check, or credit card with mobile payments. Mobile invoicing solutions like FieldPulse allow you to quickly generate a detailed, itemized invoice and send the invoice PDF to the customer immediately. It’s much easier to get paid in person rather than waiting for payment to come in from email or phone follow-ups.
4.) Consistent Invoicing
Do away with manual paper invoices and automate your invoicing for recurring jobs. If you establish a routine with your invoices (always sent on the 1st of the month for example), you tend to get more consistent payments. Businesses find it easier to plan their own finances when they know exactly when the next invoice is going to arrive and be due.
5.) Offer Discounts
Offer discounts or even rewards to clients who pay on time, or even early. Using the negotiation example from #3, how about allowing the terms to be 30 days, but a 5% discount if paid within 10-15 days? Or how about 5% off an invoice when a client pays on time for 6 months in a row? This encourages your clients to get a small financial benefit to pay on time. After all, if they decide not to pay on time, they’ll simply be leaving money on the table, and no business wants that!
6.) Offer More Ways to Pay
The goal here is to make it as easy as possible for the client to pay you. If a client hates writing checks, allow them to pay with PayPal or with a Credit Card. Any ways you have the ability accept to payment, try to let the client pay the way they find easiest. While you may pay 3-4% in fees, immediate payment is better than delayed payment or not getting paid altogether.
7.) Be a Gnat (Annoying)
Everyone hates gnats. Don’t be afraid to pester a client with follow-ups every now and then when necessary. Most often they just need a polite reminder. Sometimes, you’ll simply get paid because the client wants to stop receiving calls and emails from you!
8.) Late Fees
Charge a late fee when the client comes past due, and hold to it. Ensure that the late payment is reasonable (you don’t want clients walking out the door), but enough to encourage the client to pay on time or risk incurring the late fee.
9.) Hold Work Hostage
If the client is past due and does not acknowledge your attempts to collect payment or seems like they simply don’t care and will get to it when they get to it, sometimes you need to establish that this is unacceptable. We specifically say “sometimes”, because this is fully dependent on the situation. If you have the ability to hold work, it can be a very effective way to show that they’re paying for work, and if they’re not paying, they’re not getting the work. It’s that simple.
10.) Resort to Legal Routes
Obviously an absolute last resort, but sometimes ultimately necessary. In most cases, you’ll be ruining a client relationship and burning a bridge by doing so. However, if the client simply refuses to pay despite receiving work from you, it can be a necessary evil. Don’t forget to write a letter first, stating further measures that will be taken if you do not receive payment. Give the client every opportunity to pay what is due.
If you establish a healthy relationship and clear expectations up-front, clients almost always pay when they’re supposed to – it’s vital that you do everything you can to nurture the relationship before turning to other, more negative ways to force clients to pay. Now that you’ve freed up some time chasing your clients around for payment, you can focus on the nuts and bolts of your business moving forward!