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3 Steps to Take If a Customer Won’t Pay

Running any business is a challenge. You have to come up with a product or service people are interested in, then convince them it’s worth paying for. Unfortunately, this isn’t where the journey ends. Sometimes, the customer is convinced, has collected the product or used the service and then refuses to pay for it. This could happen in any business – a restaurant, a wholesale supplier, a rental premise – any scenario where customers pay after the fact has the potential to turn problematic. If you’re not careful, you could spend significant amounts of time chasing after cash. So, what can you do to get out of this fix?

1.    Check again

Once in a while, the cheque really is in the mail, so before you decide someone of refusing to pay, check your records twice, or even three times. This – of course – implies you’re keeping records, so maybe that should be the first step. When you make that sales agreement, have everything in writing. Note down the product / service purchased, the amount owed, the terms of payment, due dates, and consequences for non-payment. Look through your records at the start and end of every day, just to be sure it’s up to date. You don’t want to accuse someone of absconding only to find their cash sitting pretty in your account. It could sever your relationship with your customer and interfere with future deals between you.

2.    Ask them why

When someone promises to do something for us then refuses, our human reaction is to get angry, take offence, or be disappointed. In business, we frequently have to combat our natural reflexes. If we acted on every impulse, we’d soon be out of business. This is especially important when someone owes you money. You have to suppress the urge to take it personally. That slight detachment helps you look at the situation objectively and be more rational in your approach. Now that you’re calm, ask your debtor why they won’t pay. Do they have a problem with the product or service? Have they lost their job? Are they busy chasing their own debtors? Knowing the reason can help you formulate a workable plan.

3.    Try to renegotiate

It can be difficult to put yourself into the shoes of someone who owes you money, but it’s the best way to resolve the situation. Ideally, you want your cash right away, especially since the due date has passed, but it’s better to get a portion of the money than none at all. Find out if the debtor is willing to stagger out the money. Ask how far they can realistically spread out your payment, and how much they can afford per instalment. Once they’ve agreed, go over the payment terms again, and be aware you may need to have this conversation a few more times before you get your money. Agree with them that you’ll send scheduled notifications, and how often these reminders should come. This prevents later accusations of harassment.

For more tips on debt collection in Sydney, or to get in touch with one of our cash recovery consultants, call Boston Commercials today on 1300 668 699.

 

Read Also:

Privacy obligations to the debtor and third parties Part 1

Privacy Obligations to the Debtor and Third Parties Part 2

Some Simple But Effective Debt Collection Tips

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  • I have known the principal of the BOSTON Group (Derryn HARRISON) as well as key staff members (including Ben GOWER) for well over 2 decades and have been using their professional services for myself as well as for Powerhouse Logistics Pty. Ltd. on a regular basis, not only in Sydney but on a national basis.

    At all times BOSTON have been extremely pro-active, attentive, courteous and professional with all matters we threw at them. Their advice has always been extremely sound and commercial and I find them to be a "breath of fresh air" within the legal fraternity and have no hesitation whatsoever to highly recommend them.

    Peter Brueckner

    Powerhouse Logistics Pty Ltd (CEO)

  • Expect A Star has worked with The Boston Group for 10 years. In this time we have appreciated the ongoing support of Boston for all of our collection and legal requirements. Like most businesses cashflow is critical to ongoing success and growth, with Boston we have found a partner who are an extension of our business and play a key part in our cashflow management. The Boston Group bring a level of expertise to our business which is valuable and coupled with their excellent customer service we look forward to continuing to work with them for many years to come.

    Ryan Meldrum

    Former CEO

  • I have been using the services of The Boston Group and their legal entity for over 11 years. During this time I have found their service to be impeccable, delivered with the utmost professionalism and integrity. The vast majority of cases that I have placed with Boston were far from straightforward, requiring legal acumen and delicate handling. Having used all methods available without success to procure payment, I confidently placed these matters into their safe hands. In all instances a successful outcome was achieved.

    Mark Parish

    Credit Manager

  • SNP Security has had the pleasure of working with Boston Commercial Services for the past 11 years. Boston has played an integral part in the continuing success of SNP Security’s low DSO’s, 90 Day % Debt & of course Bad Debts Written Off.

    Amanda Griffiths

    National Administration Manager

Boston Commercial Services prides itself in offering specialised, professional services, through a highly experienced team of debt collector, with personalised client attention.