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As a business owner, you do everything you can to manage your accounts receivable portfolio as effectively as possible. Yet it happens to every business owner: customers who don’t pay on time. What then? The best advice in seven steps for a consistent collection policy.
1- Always stay one step ahead of late payers
Keep a close eye on your outstanding receivables. Call your customer before the payment due date expires. Ask whether the invoice was received correctly and whether all the invoice details are accurate.
2. Respond immediately if the payment deadline is missed
We recommend contacting the customer within a few days after the due date, but no later than 15 days after the due date. You can then inform the customer that the invoice is still outstanding.
3. Call the customer (again) and ask what the problem is
Keep in mind that the customer may make up excuses. Respond calmly and continue to look for ways to reach a mutually agreeable solution. Record notes from the conversation in a customer or CRM system.
4- Still no payment? Reminder
If you still haven’t received payment about 30 days after the due date, send another written reminder.
5- Agree on a payment plan
If you agree on an individual payment plan with the customer, confirm this in writing. Also, specify what the penalties will be if the company fails to comply with the agreement, and always have the other party sign to indicate their agreement.
6. Send a notice of default
It may seem a bit hasty, but we recommend that you issue a written notice of default to the debtor no later than 45 days after the due date. In your letter, specify the latest date by which the amount must be paid. Clearly state that if payment is not received, you will refer the matter to a third party and that all collection costs will be borne by the customer.
7. Outsource the collection process
Debt collection is a matter for specialists. If your debtor has not paid 60 days after the due date, it is wise to hand the matter over to a third party.