Rarely do people or businesses enter into a significant transaction to be late on payments or not pay at all. However, unforeseen circumstances can turn the best intentions into a nightmare. Once where a steady flow of income was coming in has now dried up, or an accident requiring a hospital visit has your customer now drowning in medical debt.
Life isn’t fair, and creditors must know that as well. When those in debt feel like their current situation is not being taken into account, it can leave a bad impression—leading to non-payment.
Here are some behaviors or situations that lead to non-payment and solutions to those:
1. The Vanishing Invoice
Issue: The customer lost the invoice, never received it in the mail, or went directly to their SPAM folder in their email. In the case of businesses, personnel changes can lead to a missed invoice.
Solution: The best way to combat this is to follow up on the invoice with a quick phone call to make sure they received it. Reaching out also helps you establish a rapport with your customers.
2. Lack of Ability To Pay
Issue: There is always risk involved when credit is extended, but for some people, other facets of their lives that need monetary attention will gain priority. Sometimes that’s by choice or other times not.
Solution: Talking to them and understanding the source of non-payment is a great first step. It can be something as simple as a momentary lapse in memory, or they need help organizing their payments. Coming to a mutual understanding that’s fair to both parties will help you gain loyalty.
3. Unexpected Payments
Issue: When a customer receives a bill they didn’t expect or it is more than what they expected, they could immediately shut down. Meaning, rather than calling and getting to the bottom of it, they feel slighted and won’t pay.
Solution: Make sure they understand from the beginning what the payment schedule will be and what the payments will look like. Customers should never be surprised by a bill, and if they are, that means we didn’t set the expectations correctly from the beginning.
4. The Getaway
Issue: Some customers know, or think they know, they can get away with non-payment. If you’ve been tolerant in the past toward non-payment or been relaxed about your accounts receivables, some customers might take advantage of that.
Solution: Make sure all your credit policies are standardized. If you set up all customers through the same procedures using the same parameters, you will be in a better position to collect when it comes time. Being on top of your game, monitoring your customers, and following up on late payments will lead to better results.
Understanding Your Customer is Key To On-Time Payments
The vast majority of people and businesses act in good faith when credit is extended, and they are trying to pay it back. However, sometimes their situation changes through a sudden job loss, a high-value account leaves the firm, another debt becomes the priority, or being merely absent-minded. Being flexible, predictable, and setting the correct expectation from the start will help you get paid quicker.
For more information on how Kinum, Inc. can help, please call us at 888-471-0280.
