Many people say that your customers are the lifeline of your business and you should credit your success to their continuous loyalty and patronage. While this is actually true, in reality not all customers are good for your business. These people are classified as delinquents or those who don’t pay their bills on time and unfortunately, there are some who really don’t make an effort to settle whatever amount they owe. In this article, we will talk about tips on how to lower down the percentage of your non-paying customers since bad debts has a great impact on your business cash flow.
1. Hire a third-party collector
Hire professional collection services to call these delinquent customers and ask them to start settling the total amount owed. They are well trained to handle debt recovery cases without putting your business at stake or in a bad light . They can make different payment arrangements in order to collect everything. Choose companies that are known to have high success rates in terms of debt recovery.
2. Avoid giving credits
As much as possible we should encourage our customers to pay or settle their transactions using cash, credit and debit card only. Check payments should be discouraged because it it may bounce or return due to insufficient funds. If you are new in the business, it is not advisable for you to give credits at all because once your customers start to incur debts it’s going to be quite difficult for your company to collect every single thing that they owe even if you endorse their accounts to a company that specializes in small business debt recovery.
3. Screen your clients well
If you are selling goods or merchandise, debt recovery might not be a big problem since most transactions and payments are through cash or card only. But if are a service provider and you bill your clients on a monthly basis then you should start screening them appropriately by doing the following steps:Set certain standards that the customer must be able to meet such as monthly and annual incomeAsk for proof of income such as copy of their pay slips and income tax returns or certificate of employment. Conduct background credit checks for you to find out their current credit standing especially with banks, credit card companies and other financial institutionsIf they customer has too much unpaid loans then you should either not allow them to subscribe to your services or only accept real time payments. It’s better to be strict rather than suffer in the long run.