So, if the gap continues to extend for a long time (120-150 days or beyond), think about the lowest invoice value you’d want to approach a debt collection agency with, as well as the highest invoice value you’d be willing to write off as a bad debt.įor instance, you might decide on a range of $300-$500. According to Business News Daily, waiting longer than 120 days to collect the debt means a smaller chance of actually recovering your money. If you’re thinking of doing this, remember that the longer a customer has been delinquent in paying, the less likely they’ll be to pay you. You wouldn’t want to lose more money in the process of collecting your accounts receivable. ![]() Look for an agency that has a no-collection no-fee policy, so you will only have to pay them once your dues are collected. Do your research to see if the debt collector is well known within your circles, and check their credit scores, track record, and terms and conditions. If you haven’t received payment for more than 90 days, you can use a debt collection agency to follow up with your customer to collect the dues. However, every time you use a factoring service for your customers, your service fees will keep adding up, so always think things through before selling multiple invoices. Note: If you’re in need of cash while waiting for your customer to pay, you can use factoring services, in which you sell your accounts receivable for a certain percentage of their value (usually around 70-90%). This will ensure that you receive your dues securely, preventing any risks of payment delay. Include the details of the payment due, and make a final request.ĭespite all reminders and a failed payment, if you still want to keep your customer, insist on advanced payments in the future. Set a deadline for when your services will be stopped until payments are received, and consider running a skip trace to find your customer if they’re still unreachable.ĩ0 days after the due date: Send a final notice, a solicitor’s warning letter, or a statutory demand. If your customer doesn’t have enough money to pay in full, try to convince them that paying you has to be their top priority when they have money available.ĥ5-65 days after the due date: If the customer still doesn’t respond, send a reminder and mention that if they’re regularly late on payments, you’ll have to stop providing your goods or services to them. If you can find a solution, this can also help you build a personal relationship with them, improving customer satisfaction. You can remind the customer of any interest and fees that will be added as a consequence of late payment.ģ5-45 days after the due date: Try to make direct contact with the customer, so you can identify any issues preventing them from making a payment and come up with a solution. ![]() Here’s a schedule you can follow for sending payment reminders:ħ-10 days after the due date: Send a friendly reminder with a copy of the invoice.Ģ0-25 days after the due date: Send another payment reminder, with a direct but polite message. Doing this makes your communication more consistent, and gives them a heads up to prepare for payment. If you can, make these reminders automated to reduce your workload. Start with sending a payment reminder a week before the due date. ![]() Debt recovery plan: how to recover overdue payments Personal steps you can take Here’s how you can recover your overdue payments effectively and get your money back in your register. There are many ways to avoid late payments, but what if you’ve done your part of the work and the payment still hasn’t been made? When you have to pursue an overdue payment, knowing the different steps you can take-whether personal, third-party, or legal-will help you keep your business running and your cash flow intact. ![]() When it’s time to collect payments, though, things may get challenging, especially if there’s a delay on their side. Having a good relationship with your customer is crucial.
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