Few business situations are more stressful or frustrating.
You’ve done everything right. Prepared the most thorough proposal. Sold your product like a champ. Provided fantastic customer service. Delivered as promised. Sent the bill.
Radio silence.You’re getting stiffed.
Perhaps the customer is lamenting an industry-wide cash flow challenge, their unexpected business costs, or regaling about a big receivable about to come in. Your calls may be going unanswered or reaching a full voice mailbox. Any of these is far from good, and signals the money owed to you is at risk.
First and foremost, you had an agreement with the customer. You delivered on your end. Timely payment is the corresponding part of the deal, even when unwritten. Whether your agreement was to be paid on delivery, Net 30 or otherwise, this is business.
The temptation to be patient is deep-rooted. The customer is always right, remember?
Not when your bills are being ignored.
Stand up for yourself, your company and the people on its payroll. In collections, the odds of getting paid can be statistically predicted, and they diminish substantially with every passing day. If you aren’t getting serious about collecting from a customer, another one of their creditors surely is. Oftentimes only the early bird gets to eat.
And since you’re reading this, it’s likely someone’s sights are on your lunch right now.
All the while, your province’s statute of limitations on debt collection is drawing ever nearer—after which the debt will be statute-barred and virtually worthless.
You had an agreement with the customer.
Timely payment was part of the deal.
If you’re getting stiffed on a debt, don’t wait for the inevitable to happen. Here are 3 steps you need to take right away:
1. Give final notice.
This means specifying the full amount owed, the original due date and a deadline to pay. It’s important to put an end to the promise of payment that's perpetually a week or two away. You would have never agreed to do business on such terms, and finding the money is not your problem.
2. Clearly indicate the next steps.
Tell the customer you need payment in full by a specified date and time. If not, mention your collection agency by name and specify the consequences. For example: “If payment in full is not received by 4:00 p.m. MDT on Friday June 15, this account will be assigned to our collection agency MetCredit and consequently reported to national and regional credit bureaus.”). Stating the specific consequences should spur the debtor to immediate action if there is any chance you’ll be paid directly.
3. Follow through.
Just as parents must deliver on any consequences stated to their children, you need to do exactly as you say with debtors. The same laws of human nature apply as you establish boundaries and credibility. Waffling and second chances undermine that credibility, and pave the road to disaster.
Don’t blame yourself for acquiring a non-paying customer. What matters is that you stand up for what is owed to your business, and do it while money is still available to pay your bill. A good collection agency will collect your money quickly and do everything possible to preserve the customer relationship, while demonstrating your business takes timely payment seriously.
Don’t blame yourself for a non-paying customer. Stand up for your business while money is still available.
Identifying yourself as a supplier that does not tolerate broken promises or excuses will cement your reputation as a no-nonsense business, will increase your priority as a payee, and reduce the likelihood of similar problems down the road.