Use these 5 tactics to encourage your clients to pay on time if you want to avoid collecting debts.
Chances are, no matter what kind of company you operate, you will come across an overdue debtor. This consumer or client may sometimes make an honest mistake and fail to make a payment. Sometimes they will purposefully avoid you.
And, although there are several effective methods for recovering money owing to you, it doesn’t have to come to that. Here are five clever techniques to get your customers or clients to start paying you on time:
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1. Take Credit Cards
While taking credit cards isn’t appropriate for every business or transaction, it does enable you to shift the duty of collecting to a third party, namely a credit card company. If your consumers buy from you, the little charge you’ll pay to take credit cards will be far less than the expense of hiring an attorney or an outside agency. Allow Visa or Mastercard to handle debt collection while you focus on what you do best: operating your company.
2. Conduct a credit check
Because credit checks may be time and money consuming, they are particularly crucial when your client or customer owes you a considerable amount. It’s just not worth your effort to run one for a $40 transaction. However, if you’re embarking into a long-term relationship or one that may have a significant influence on your bottom line, you should conduct a credit check. It does not ensure payment, but it might help you avoid troublesome consumers and customers from the start.
3. Examine the References
Again, this is especially crucial if you want to conduct substantial or ongoing business with a client or customer. Contact your prospective client’s previous business partners and ensure that they had a pleasant experience and were paid on schedule. Invite your prospective customer to do the same with your previous business partners.
4. Create an Effective Contract
It is essential to document the details of your agreement (including payment amounts and due dates). You may assist guarantee that the conditions are properly stated and agreed upon by having your client agree to the terms in writing. They have a lot more difficult time making excuses such, “I didn’t say I’d pay you that much!” That is why you must include it in your contract.
5. Make Appropriate Eye Contact
It’s a good idea to contact your debtor before contacting a debt collection agency or an attorney. As previously said, it is also plausible that they just forgot. In this case, a little reminder may work wonders.
However, debtors are much more likely to pay if you are pleasant and kind. A phone call, email, or letter just asking whether they are aware they are behind on their payments is the best place to start.
The harsh reality is that you will sometimes encounter an overdue debtor. No matter how careful you are in the beginning or how carefully you pick business partners, you may find yourself dealing with the debt collection procedure. However, by following the tips above, you may successfully limit the number of problem debtors you’ll have to deal with.
