When a client does business with you, you expect to be compensated for your product, labor or services. Most clients do pay. But what happens when a client does not pay or pays very late? Fortunately, you have options at preventing non-payments and debt collection solutions for recovering money owed you.
Preventing Non-Payments
Trying to collect from a non-paying client can be difficult. It's best to prevent the problem by taking these precautions:
- Research the client. If you haven't done business with this client before, research a bit about them to know who they are. You can do a simple Google search, check LinkedIn or contact the Better Business Bureau to determine if they have any complaints against them.
- Have a contract. Even if the client is your best friend or a highly respected business leader, you should always have a signed, written contract. Most contracts will address the following:
- Payment schedule
- Terms
- Preferred payment method
- Scope of work
- Deadlines
- Late payment policies
It's crucial to have the details in writing. If problems occur, there is less chance of misunderstandings. For example, if the client knows they will owe additional fees for overdue payments, they may be more likely to stay on top of payments. If not, they will face interest payments. If you fail to get a written contract, you have no guarantees.
- Ask for a deposit. If you request a percentage of the payment in advance, you will have covered at least some of the non-payment. You can call it a retainer or deposit if necessary. In fact, asking for this kind of down payment is quite common with business owners, especially those that provide services rather than products. It helps cover the time and expense you invest in the project.
Debt Solutions for Companies
At some point, you will need to approach a non-paying client. You will need a solid, professional, and tested debt collection solution to do so. If you have taken all the preventative measures and must now collect a past-due debt, act quickly. Here are some debt collection solutions that may be helpful to use:
- Weigh the pros and cons. You need to determine if collecting the debt is worth it. If it costs more to collect the outstanding debt than the money owed, you may wish to write it off and not do business with that individual again.
- Follow up with the client. Some clients are simply disorganized or forgetful. Don't hesitate to send an email asking for payment per the terms of the agreement. It doesn't excuse a late payment, but sometimes invoices are misplaced, people have emergencies and so on. Depending on your history with the client, give them an opportunity to make it right.
To do this, send them a friendly yet direct note or phone call reminding them of the past due invoice. Indicate that you would like to resolve the issue quickly. This is a good time to ask if they are happy with the service or product, or if they need help with the payment procedures. Be prepared to take payment over the phone if this is an option, as some clients will want to take care of it immediately.
- Talk to an attorney. If the client ignores your requests or avoids your phone calls and emails, and if you have determined that it is worth it to pursue the payment, then it's time to engage a third party. Talk to an attorney who can suggest the appropriate legal actions to pursue against the client.
- Hire a debt collection agency. You might consider hiring a debt collection agency. In fact, they can offer good debt solutions for companies with a variety of services. You will find a reputable agency the same way you would find other professionals. Ask individuals in your business network, or check online reviews to find several to interview. You can also check for BBB-certified agencies or find members with the Commercial Collection Agency Association. Or, you can simply contact Debt Recovery Resources first to save time and money.
- Factoring services. If you need cash quickly and have several unpaid accounts, you may consider a factoring service, which purchases your overdue accounts for a percentage of the amount owed. The company should advance you the money fairly quickly and take over the accounts. They will collect the debt and send you the rest of the payments less the service fee.
Keep in mind that you have options, which is why you should consider Debt Recovery Resources. If clients are falling behind on payments, you need to act quickly. As debt ages, there is less chance of recovering money. Debt-RR is here to help you recover as much as possible. Don't hesitate to consult with Debt-RR. We will thoroughly evaluate your overdue debt and propose debt collection solutions that work.
