Businesses spend a significant amount of time and money trying to attract clients, so it can seem counter productive or even ludicrous to suggest that you should intentionally rid yourself of a client.
However, there can come a time in a commercial relationship where it is simply no longer commercial or financially worthwhile. Persisting to trade with clients who are not paying their bills, can cost you money, decrease staff morale and impair your ability to provide good service to other clients.
On the other hand, culling a few of your difficult debtors and replacing them with good clients can improve cashflow, increase profits and reduce stress. It is estimated that for most businesses around 80% of income comes from 20% of clients. Therefore dispensing with a few consistently poor payers is unlikely to affect your bottom line in a negative way.
Some business advisors recommend firing 10% of your clients each year, however, we recommend businesses examine their own client behaviours on a case by case basis and have a professional formulate a customised strategy to improve their cashflow efficiency.
Read Also: The Advantages of Outsourcing Debt Recovery
How can we help?
Letting go of non-paying clients can be stressful, but it may be an important step for your business to move forward financially. That’s why we are here to help.
We have been collecting debts for a long time, so we have heard every excuse in the book and we know how to deal with the most difficult of debtors. We are also experts at sorting the “well meaning debtors” from what we call “professional debtors” – those debtors who are skilled at avoiding and stringing out payments and who will ultimately cost your business money.
The first step toward improving the quality of your client base is identifying the debtors that consistently require you to expend substantial resources simply to get paid. Business relationships are built on the premise of mutual gain and when one party is no longer gaining what they originally agreed to, they must give serious consideration to whether their time would be better spent either doing work for good clients from whom they will receive full compensation or seeking out more of such clients.
We can help you identify your most problematic debtors by examining their payment history and determining the actual financial benefit your relationship with them is producing.
A strategy must be formulated to recover as much of their outstanding debt as possible to minimise your loss. In the meantime, strict policies must be instituted to prevent further trade until their outstanding balances have been cleared.
When it comes time to formally part ways, we can also assist you to draft courteous formal notifications of your unwillingness to renew your contracts with difficult debtors in the future.
Getting rid of difficult debtors is not easy and can be a very risky move without the right assistance and advice. However you can be confident that with the help of our experts, your business can flourish with some strategic pruning.
Talk to one of our friendly professionals now about how we can improve your business.