When you’re running a small business, you know one thing: relationships are key. Your customers are what fuel your business and you really can’t afford to lose even just one. That’s why when it comes to talking to customers about late payment, you often find yourself hesitating. You never want to do anything that could strain a relationship, but at the end of the day, you deserve to get paid. That’s why it’s important to find ways to collect your payments AND keep the relationship. Here are a few tips and tricks to “friendly” collections:
1) Show Priority from Day 1 – If you show your customers from day one just how serious you are about getting paid, they’ll be more receptive to the entire collections process. Have all customers fill out a credit application and sign a personal guarantee. Have your credit policy visible. When they see that you run a “tight ship”, they’ll understand when you follow up for late payment that it’s part of your business process and not meant to be unfriendly.The more work you do upfront, the less you’ll do later on.
Don’t make a habit of giving any customer special treatment, as they will come to expect it each time around and even more so, expect you to be more “forgiving” in late payment situations2) No Special Treatment – Don’t make a habit of giving any customer special treatment, as they will come to expect it each time around and even more so, expect you to be more “forgiving” in late payment situations. Operate on the same terms with all your customers. At the very least, if you are offering different terms, make it be flexibility that is earned. If you have customers who have been particularly loyal payers over the years, it makes sense to offer them more flexible terms as a reward.
3) Communicate Early and Often – Another way to help display your methodical process to customers is to start with payment reminders early. When the payment date is closing in and you haven’t received a check, reach out to your customers and remind them their payment date is approaching. As soon as a payment date passes, begin reminding your customers by email or mail often. This, again, reinstates how organized your payment process is and will let customers realize it is simply just business.
4) Listen – If you want, however, to keep your customers from thinking you are merely a collections robot, you need to make time to listen. If a customer is having a hard time paying you back, listen to their reasons why. Some cases really might be hopeless and you are best off waiting for when they have the money. If you take the time to listen, you can better trust your gut. No matter what, this gesture of giving up some of your time (one of the most valuable things you have to offer as a business owner) means a lot to your customers. It shows you care and are willing to work with them.
5) Find Positive Incentives – The best way to keep collections friendly is to reward when appropriate. As mentioned earlier, if a customer is particularly consistent in their payments, consider offering them longer terms. It’s a great way to say thank you. Also, offer early payment discounts to customers. It’s a much more positive way to motivate customers to pay on time (vs. late payment fees). Find different ways you can “reward” good payment behavior vs. “punishing” late payment behavior.
Collections is a delicate process but one you can make easier by taking the right precautions and acting appropriately to late payment situations. Although a sensitive matter, never let the risk keep you from the attempt. At the end of the day, you need this money to run your business. Never forget that!