If your customers are starting to think of their due date as more of a suggestion than a requirement, be sure to give this a shot.
According to attorney Jim Kozelek, a partner at Weltman, Weinberg & Reis Co., LPA, who specializes in Commercial Collections, A/R may have some luck getting slow-paying customers to expedite payments by getting back to the basics.
Employers should start by not underestimating the power of the phone. With more and more companies relying on electronic communications, a phone call from a particularly annoyed Collections staffer can make the situation seem especially urgent.
In some cases, a well-timed phone call may be all it takes to get the message across that your firm is tired of payment terms being stretched further and further.
Be sure to send out a follow-up letter within 45 days of your phone call if the customer still hasn’t submitted a payment. Not only will this serve as a paper trail in the event you have to take more drastic action, it will also help to confirm the address you have is still valid.
If you don’t already have these in place, Kozelek also suggests the following precautionary measures:
- Hitting customers with a 1.5% to 2% interest charge on any balance that hasn’t been paid within the terms of agreement, or
- Asking for a personal guarantor.