In almost every business, there will come a time when customers need to be reminded of late payments. Whether it’s because of an oversight, a lack of funds, or a deep dissatisfaction with your service, this is never a fun situation for you to find yourself in. We collected some tips that might be helpful for you when handling non-paying clients.
Shutting off your client’s services isn’t usually a good move, so what can you do to get them to pay? Here is some advice for encouraging and handling non-paying clients without compromising your business relationship.
When Handling Non-Paying Clients You Should Call them.
It might seem like an obvious solution, but in today’s world of hands-off, automated communication and payments, it might surprise you how many past-due bills you can resolve with a simple phone call.
Talk to the client and directly broach the topic. It could simply be a mistake or an expired payment method on file. Calling them will feel more personal and will get their attention. A polite reminder is a great way of handling non-paying clients and could be all that’s needed to get them up to date.
Another great way when handling non-paying clients is also sending emails so that everything gets documented. That way, if the situation escalates and the customer later claims they didn’t know they owed anything, you will have old emails to reference and share as proof.
Create incentives for clients who fall behind.
Reach out to customers who are constantly late with their payments. Perhaps they lack the internal resources to stay on top of finances, so you might contact them a few days before the invoice is due and ask if there is anything you can do to help them get the payment processed. Ensure your billing process is simple so clients won’t feel overwhelmed every time they need to make a payment.
When handling non-paying clients who are regularly falling behind on payments, it may be wise to offer them a discount for paying up front. For example, you might offer them a 3% discount if they pay you upfront for the entire year. That means you can enjoy a year without needing to chase them, and it frees up a lot of your time each month. You might also consider offering smaller discounts for paying quarterly to those who lack the means to pay yearly.
Try to avoid collection agencies when handling non-paying clients.
ARRC Technology Accounting Specialist Tina Eggert recommends staying away from collection agencies as much as possible. They will often charge 25% or even more of the money they collect as their fee, so it should only be a last resort, such as when you must make a bad debt write-off.
When handling non-paying clients always remember that they are more likely to pay attention to your accounting team than an unknown collection agency, as they already have a relationship with you.
Get creative when handling non-paying clients
It may be helpful to bring the last two invoices directly to their office and show them the numbers in person. You may get lucky and go home with a check.
Another thing that Tina suggests is calling the business next door and asking if the company that owes you is still in business because they have been ignoring your calls. She reports that this can be effective and will provide you with information on what is causing the delay.
When a client gives you excuse after excuse—or even worse, lies to you—it can be tempting to be impolite. As much as you might want to throw objects across the room, try to be nice on the phone. The aim of handling non-paying clients should be to preserve the relationship with your client for as long as possible.
Finally, whether your MSP deals with regular non-payers or it’s only an occasional happening, maybe it’s time to inspect your policies and procedures to minimize non-payers. Ensure your contracts have specific and clear payment terms, late fees, and a list of actions you will proceed with if the client cannot pay you. Be sure to review the contract with your attorney.
Although non-paying clients might be a part of doing business as an MSP, you can keep them to a minimum with the right approach.
If you have clients who drag their feet when it comes time to pay their bills, you really need to attend our next Academy. Tina Eggert and other industry leaders will cover what it takes to collect the money owed to you, no matter how long they have been ignoring you. We’ll teach you the many tricks we use to get their attention. Don’t miss this session!
Register for Academy today! Click HERE!
If you prefer to learn on your own, we have lots of great resources available in CORE. Access them here: https://chartec.net/chartec-core-msp-education/