Just because a customer claims to have empty pockets doesn’t mean you can’t collect.
It’s not an ideal situation. You’ve rendered a service or delivered a product, but your customer hasn’t paid. How you respond can impact your future cash flow, so make sure you follow time-tested debt collection procedures.
Check Your Records
One important step is to always double-check your books. Unfortunately, billing errors can happen, and they’re more common in certain industries, such as healthcare. A simple misplaced decimal point can lead you to believe that you haven’t gotten paid even though the money already sits in your bank account.
Train your staff to check for billing and accounts receivable errors before you start collecting on unpaid accounts. It’s better to recognize your mistake now than to apologize profusely later.
Take Baby Steps
You might want to get your client on the phone right away, but the best debt collection procedures start with a friendly letter. Let your customer know that your records indicate a shortfall and that you’d appreciate prompt payment.
Don’t use derogatory or threatening language, ever. Maybe your client tossed your invoice by accident, or perhaps your customer changed accounting software and has encountered technological difficulties. If you lob insults, you’ll lose the prospect of future business over a misunderstanding and could face serious fines for compliance violations.
OpenForum contributing writer Rieva Lesonsky advises businesses to keep their cool during debt collection. Don’t yell, get angry, or let your professionalism slip. Instead, she recommends trying to help your client satisfy the debt. You might collect on unpaid accounts if you offer flexible payment options.
Installment payments, for instance, might prove easier to handle for a cash-strapped customer. She also suggests accepting a partial payment as a last resort, but don’t make that offer until you seek outside help.
Hire a Collection Agency
Want cash in hand? Go to the experts.
Working with a collection agency can increase your chances of recovering unpaid accounts tremendously. These professionals know how to communicate with customers who can’t or won’t satisfy their debts, and they might be able to improve your cash flow as well as your accounts receivable management strategy.
The best debt collection agencies start by sending a reminder letter in your company’s name. If they don’t get results, they send third-party letters to show that you won’t let the debt go unpaid. They can also handle any legal action that needs to be taken on your behalf, which means that you can focus on running your business instead of chasing down unpaid accounts.
You don’t have to start with a collection agency, but you might need one if you can’t collect debts on your own. It’s far less expensive than hiring an in-house collection staff, and you won’t endure nearly as much stress.
If you’re looking for a collection agency that can fulfill all of your needs, get started today with Rocket Receivables. We’re here to help you resolve your cash flow issues and keep your accounts receivable in check.