It doesn’t matter whether you have a big or small business, debt collection is exactly the same; customers who are late on their payments are usually disagreeable. However, you can’t just go knocking on a customer’s door demanding to be paid, lest you get into legal trouble.
You could, however, try avoiding these debtor management practices to make your debt collection activities more efficient and easier:
- Never use handwritten invoices, as the bank details and other relevant info might be illegible.
- Never let an invoice go. That money is rightfully yours, and although debt collection could be seemingly never-ending and challenging, you would get what’s owed to you with persistence.
- Never settle on a discounted payment unless you’re 100% sure that you wouldn’t get your payment otherwise, advise experienced debt recovery lawyers in NZ. It’s fairly easy to settle on a reduced rate out of desperation, but you’d be essentially giving your late-paying customer power over negotiations, which is something that you must never do.
- Never postpone your debt collection tasks. If a customer has answered your request for payment, follow up immediately. Prompt communication with late-paying customers should be prioritised to help increase your chances of faster debt recovery.
- Never agree to a proposed payment plan unless the plan your customer proposed is realistic. For example, if the unpaid invoice is $2500 and your customer proposes a 24-month repayment plan, amounting to about $100 a month in repayment, it’s wise to reject the plan and suggest a more realistic plan that would benefit you more.
- Never delete customer correspondences about your debt collection efforts since every single communication might affect your ability to recover the debt.
It’s likewise bets to keep in mind that you should never feel bad about pressuring customers to settle their unpaid invoices. If delinquent customers continue to ignore your payment requests, you simply need to step up to the task because getting your payment is a natural payment of your contractual relationships.
Think about this, had you gotten paid upfront and then failed to deliver what you owe a customer, he or she would be the one collecting on you. Likewise, keep in mind that you have already agreed to receive payment by a specific date and collecting on delinquent customers is in line with the terms of your trade.
On the other hand, if you have done everything you can to no avail, consult a debt recovery lawyer for your options.