Many entrepreneurs have strong relationships with the majority of their clients and receiving payment for services is never an issue. However, it’s not uncommon for a business owner to have difficulty extracting payment from a client at some point in his or her career. These situations must be handled tactfully – or else a company may lose business – but firmly if an enterprise hopes to receive what it is owed.
Provide a Policy From the Start
Laying out payment expectations for products and/or services from the very beginning of a relationship is key. Companies that fail to outline what their requirements are may find their clients aren’t unwilling to pay, but instead simply confused about the process, unsure about what is owed when or unaware of the repercussions for late payments.
Written contracts individuals can read through and keep in a file are a must. By ensuring everyone knows what terms are as soon as they decide to employ services, entrepreneurs do themselves – and their clients – a favor.
Send Reminders Out Quickly
Unpaid invoices don’t go unnoticed – companies rely on timely payments to keep operations running smoothly. When a bill doesn’t come in as expected, entrepreneurs need to follow up immediately rather than let the situation escalate. A company should send a reminder through the medium in which it typically bills – whether it sends paper statements or prefers electronic emailed invoices.
If this is a client’s first time missing a payment, this initial reminder may be lenient and simply remind a client they’ve forgotten to settle the bill. An individual may have assumed he or she paid the amount owed, thought a spouse handled the fee or simply misunderstood what date the money was due.
However, it’s possible a business has clients who neglect to pay by the due date the majority of the time – a habit that can have a significant impact on an enterprise. Rather than sending gentle reminders in these instances, entrepreneurs may choose to add on late fees. Make sure these charges are clearly marked as such to keep a client aware of how unmade payments add up over time. Providing updated bills with additional charges for late payment as soon as possible is critical. Continue sending these if the bill still goes unpaid – neglecting to send additional reminders can lead clients to think a business isn’t serious about getting what it is owed.
Keep it Professional
When a company has sent multiple reminders and has yet to receive payment from a client, it’s easy to get frustrated. However, sending an angry letter or leaving a rude message is an act you may live to regret. Rather than bully a client into making a payment, it’s important to remain calm and professional at all times.
When an individual feels as though he or she is being strong-armed into paying a bill, the person may be even less likely to resolve it in a timely manner. Even if the client is clearly in the wrong and owes money, he or she could still continue to ignore notices after being treated poorly because of embarrassment or anger toward a business owner.
Turning to Other Methods
A business owner can send out plenty of reminders and past due notices, but some clients may still refuse to settle their bills. Rather than continuing to send reminders when they clearly aren’t working, at some point, it’s more beneficial for business owners to turn elsewhere for assistance.
In some instances, working with profit recovery specialists may be enough to get the ball rolling and spur unresponsive clients to pay up. While this creates an element of urgency and may resolve the situation more quickly, it also eliminates the risk of creating harsh feelings that can develop between a client and business when legal counsel gets involved.
But in some instances, asking an attorney to get involved is necessary, particularly if a client owes a large amount and has avoided all notices for months. Sometimes, simply having a lawyer make a phone call or send a letter on your company’s behalf can generate a payment from a previous unresponsive individual – and by proceeding with this option, you avoid any litigation that can breed resentment from someone who hasn’t paid. Obviously, remaining professional and cordial throughout the process is a must – it’s not a sign of weakness and willingness to accept a client’s behaviour, but rather a way to maintain your reputation and potentially win a client back once the situation has been settled.