What to Do When the Customer Can’t Pay
It’s a common theme these days: Your company mails an invoice to a customer and 30 days pass with no payment. Another invoice goes out and another 30 days pass. Now what? At most organizations, the next step often involves a strongly worded letter, but that’s the wrong approach, especially if you want to preserve the relationship with your customer, says Curtis, CEO of Commercial Collection Agency Burt & Associates, Instead of taking a tough stance when an account goes unpaid through two billing cycles, get the sales rep to pick up the phone. It’s a simple act that can have some surprising results.
“It’s almost becoming normal to be past due “When you pick up the telephone and say nicely, ‘We haven’t been paid and I wanted to find out what’s going on,’ [customers will] often send the check right out. In my experience, all you have to do is ask, and in most cases you’ll get paid.”
The reason: These days when cash is tight, many organizations have internal policies of holding bills for a certain number of days – say, 90 or 120 – but include a caveat to pay those bills if the vendor calls. “I’ve had very few clients with a cash flow problem that’s so bad they can’t pay at all,” says Curtis
Still, those clients are out there – and in those cases, again, Curtis urges you to talk it through and work something out. “If they’re truly strapped, come up with a way for them to pay over time,” he says. “They’ll be so grateful.”
Curtis recently ran into this very situation. A client needed a collection project done quickly. Curtis did it and sent the $10,000 bill but was not paid. About 30 days later, he sent a second bill. When still no payment arrived, Curtis says he picked up the phone and put “a nice squeeze” on the owner of the company.
“I said, ‘Look, I don’t need to know all the details of your situation; I just need to know I’ll be taken care of “. The customer was so grateful for Curtis willingness to communicate and come up with a payback plan that worked for both of them that he now recommends Curtis to others.
So why doesn’t a letter cut it when a customer’s payment falls behind? It feels impersonal. It puts the customer on the defensive, and the tone can be misunderstood.
“You have a higher likelihood of being understood and perceived as empathetic over the phone or in person,” says Curtis And that’s important, both in maintaining your relationship and getting someone to write a check.
Here are some final points to consider:
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