Collect Bad Debts Now, Not Later
Want to know how to collect bad debts? BusinessMag has recently published an interesting article on 9 Ways to Collect Bad Debts for Small Businesses. Here are several of the ideas suggested in concise format:
Timing is Everything
Statistically, debts that are over 30 days late are less likely to be paid. Accounts that are over 6 months overdue have a 57% chance of being settled whereas bills that are over 12 months old are very likely not to be paid at all. This means that you should always collect bad debts as soon as possible to avoid loss of income.
Never Assume You Can’t Collect Bad Debts
Your customer might not have realized that his or her payment has failed, so the first thing you should do is contact your customer for an open, honest conversation about overdue bills. If your customer has trouble making payment on time, see if you can discuss a customized payment plan. This will not only improve relations but will also boost your brand loyalty and also help ensure that you’ll receive the monies owed (eventually).
It used to be that sending a letter asking for payment would many times prompt a response, but nowadays, it takes a lot more to get a delinquent customer’s attention. Some experts suggest that meeting a customer in person might do the trick. Showing up unannounced at the office, and then offering to wait until the accounts payable manager is free will definitely get some attention — as will showing up at the same place the customer frequents for lunch or coffee, and making a point to stop by and discuss the overdue account.
Maybe it’s obvious, but do try to collect bad debts or failed payments as soon as possible and always target the low hanging fruit first. The highest collection rate for failed payments is immediate and then the rate of collection falls for every day that goes by. Luckily at Ezypay and iconnect360, our clients enjoy a collection rate of 99.5% for all transactions.