Many businesses dread dealing with customers who have outstanding accounts or unpaid bills. This issue is unavoidable, thus, it is important to put up a system purposely for this matter. A wiser step to undertake is to settle the occurrence of late payments at the very start of a business transaction. Typical steps include:
- Agreeing to the price during the quoting stage including any interest or charges for late payment. This ensures that payment terms are clear and allows clients to choose the type of term that is perfect for their capacity.
- Conducting credit checks when deemed necessary, invoicing at a scheduled time, and following up invoices with statements.
- Preparing a collection letter template that will be used should late payments arise coupled with a timely process for sending the letter. This process will make sure that valuable time is not spent chasing late payments.
- Documenting every transaction and conversation. For example, recording the letters sent (what, when, where and why) or taking note of phone conversations with the customer. These details may be turned into legal records should the need for legal action with a collection agency or solicitor is pushed through.
These letters should range from a friendly reminder to a final notice:
Although the last collection letter would seem an ultimatum it is still important that the good client relationship is not damaged. Keep in mind that the goal of these collection letters is to maintain customer goodwill as well as to encourage prompt payment.
If you do end up having to send a final notice to a client it is important that you do not make empty threats. This will damage the client relationship. However, it is best to be prepared to follow through with collection measures should it become necessary.