More than 90 percent of business clients will pay you on time. However, a small fraction will hold out. For some, paying you simply slips their mind. But there are others who either won’t or can’t pay, and that’s a problem.
Late payments aren’t harmless. They can hamper your cash flow and, in some cases, force you to borrow temporarily to finance your operations, all at your expense.
In this post, we take a look at what you can do if a business client refuses to pay. Check out the following ideas:
Send A Friendly Reminder Email
You don’t want to go in heavy-handed if your client is a day late with their payment. Instead, send them a gentle reminder email, telling them what they owe and that the formal deadline for payment already passed. In most cases, the client will respond apologetically and immediately send you the money.
If the business client still delays payment, stop working for them. Only provide services they’ve paid for. If they value what you do, they will resume payment quickly.
Remember, in some cases, you might be investing your time in a client who simply can’t afford to pay. Dedicating precious resources to them without any chance of compensation in the future is like throwing good money after bad.
Send A Debt Collection Letter
If a client fails to pay you after a certain allotted grace period – perhaps 30 days – send them a debt collection letter. A letter is more formal than a reminder and lets the client know that they are on notice. If necessary, you will use a debt collection service to ensure that you get the money they owe you.
If you decide to send a debt collection letter, get a professional to draft it for you. They’re often good at crafting the language in such a way that gives the letter real legal clout.
Remember, if you send a debt collection letter, it doesn’t commit you to debt collection. It is just another tool that you can use to get paid.
Hire A Debt Collection Agency
As sites like https://www.ccbureau.com/ explain, sometimes the only option is to hire a debt collection company. These organizations have the legal authority to collect debts on behalf of your business. Just like consumer debt collectors, they can contact the debtor business, determine the reason for nonpayment, and figure out the best way to mitigate your exposure on the account.
This approach is growing in popularity across both Europe and America. Debt collection agencies help companies outsource challenging and costly debt management processes, without having to dedicate in-house teams, greatly reducing the pressures they face.
Many agencies operate a collaborative approach, working with you to create tailored solutions. Agencies are highly effective, and are usually able to make good on the money you’re owed in the majority of situations.
Business clients failing to pay you is a common problem. However, there are solutions: you don’t have to suffer in silence. Use the strategies outlined in this post to help you.