January 27, 2021 by Lisa Brammer
You’ve done your part. You provided your customers with the goods or services, sometimes jumping through hoops to meet their expectations. Now that it’s time to get paid—crickets. Frustrating, I know. But there are things you can do to improve your collection rates.
- First and foremost, Keep your emotions out of the driver’s seat.
When money is involved emotions can run high. It’s true for both the creditor and debtor alike. It’s important to keep your feelings out of it. Try to keep your cool and be as removed and professional as you can.
- Provide a financial agreement to all clients before doing business.
This sets expectations and hopefully provides a meeting-of-the-minds regarding each party’s responsibilities early on. (Want to learn more about Financial Agreements? Read “The importance of a Well Written Financial Agreement”.) This document can also be used as a written policy on how billing and collections are to be handled.
- Send late notices as a friendly reminder that their payment is due. The point of these form letters is to get a payment. It is important to keep the tone amicable—you don’t want to alienate anyone. You want them to sound professional.
- Follow up with a phone call. If you still are not receiving any payments, you might want to follow up with a phone call. They are a little harder to ignore than a letter. Stay calm and try not to come across as angry when communicating with the client. The goal of the call is to find out why they haven’t paid and to collect money. Depending on the amount owed, it’s a good idea to come up with couple of different payment arrangements you could offer to get the ball rolling. Then follow up with a letter (for them to sign and return) outlining your newly agreed upon payment arrangement.
- Take a beat, think long and hard before taking legal action. If the steps above don’t work, many businesses will initiate a lawsuit. Don’t get me wrong, I get it. Sometimes it feels like that’s your only option. But before you file, do some research to make sure you will be able to collect. Winning a lawsuit is one thing but collecting is another altogether. A knee-jerk reaction of going to court could end up costing you more if the judge rules in your favor, but your customer is still unable to pay.
- Hire a third-party collection agency. Debt collection is tough and requires a lot of finesse. It involves the ability to maintain a balance of effective debt recoveries while preserving your positive image and relationships. It’s not for everyone. If you decide it’s not for you, you always have to option of hiring a third-party collection agency to do the heavy lifting for you.
United Credit Service, Inc. is a full service, licensed revenue cycle management and debt collection agency that has been providing effective, customized one on one management and recovery solutions for our business partners in the Midwest since 1950. Visit our website at http://www.unitedcreditservice.com, call 877-723-2902, or check out our YouTube video.
Image provided by: Creative Commons