It is said that “a well defined problem is a problem half solved”. Being aware of the reasons why your customers may be ignoring your overdue notices may provide insights into how you can more effectively recover overdue accounts and make adjustments to counteract those reasons where possible.
What reasons could your clients possibly have for not responding to your overdue notices and paying their accounts when due?
Reasons your notices may be ignored
- It simply got lost or they never received it
It could be that your notice is not being ignored at all but has actually not come to the attention of your client. A friendly reminder by phone, email or letter may remedy the situation and result in prompt payment.
- Invoice contains incorrect information
Invoices containing wrong biller information or an inaccurate description of the products or services may cause accounting problems at your client’s end. They may not have the time to call you to discuss the issue and have simply put off payment for the time being. Ensuring all invoices are proofread by at least two sets of eyes before going out can prevent such situations from happening.
- Short on funds
An unexpected expense may leave a client short on funds and unable to pay your account. In some cases exerting sufficient pressure may cause the customer to prioritise payment of your invoice by taking funds from another expense. In other cases, a payment plan is more suitable and can ensure the debt is gradually being paid as the customer’s situation allows.
- Client is procrastinating
Some clients are disorganised or they simply don’t see timely payment of invoices as a priority. These clients may respond more readily to a strongly worded notice from an external collector or lawyer threatening further legal action if payment is not made.
- Fees are disputed
If your bill was higher than expected, not what was agreed to or it contains charges that the client was not warned of, they may simply ignore it. Not all clients will immediately contact you to raise their concerns about an invoice. Some will simply withhold payment because they do not have the time or resources to investigate or discuss the issue.
Making direct telephone or in person contact with your overdue payers will usually bring any disputes to light and allow both parties to resolve the matter directly.
- Customer has switched to a different supplier
In some cases, when clients switch to a different supplier, they are intent on a fresh start and may ignore outstanding balances owed to their old supplier in the hope it will go away. These debtors usually require a firm approach and are often best left to a professional debt collector.
Ultimately, if you can address the reasons that even 50% of your debtors are not paying their bills on time, that’s a 50% improvement to your cashflow and more usable funds that are coming into your business each month.
An externally sourced accounts receivable and debt collection consultant can work with you to improve your cashflow efficiency and decrease the stress of dealing with overdue accounts and difficult debtors.
For further advice and assistance on debt collection in Sydney, call Boston Commercials today on 1300 668 699.