When your clients’ cash flow is hurting you’ll see it in their history, from orders to payments. Perhaps your in-house billing and collections team has tried to reach them on the phone, left messages and never heard back? These are all signs that your client is having some issues that might need the help of a professional service.
Overdue payments don’t have to be the bane of your company. Look at these tips and get an idea of how you can control the cash flow problems for your clients and your company. Your best bet might be siding with a debt collection agency.
1. Once You Spot a Problem, Address it Immediately
You can’t wait to follow up with accounts that are late. Every month you don’t collect you’ll find it more and more difficult to get that account current. For instance, you’ll have around an 80 percent success rate on getting a client to pay if you can work with them within two months of a missed payment. The percentage drops below 25 percent when 12 months have passed without payment.
2. The Law is on Your Side
Don’t be afraid to take a client to small claims court if your invoice is below $5,000. You can’t risk letting these accounts slide. Ask any small business owner who has and they’ll tell you cash flow takes a hit when too many accounts are “forgiven.” It’s fairly inexpensive to go after these overdue payments in small claims court. However, if you are pursuing larger claims, you need to hire an attorney because the process is much more difficult and takes some professional coaching along the way.
3. Know When the Relationship is Damaged Beyond Repair
You know that your return customers are your bread and butter. It costs more to attract new ones; so you do everything you can to hang on to the ones you’ve already established a relationship with, even if they pay late on occasion. However, if you’ve made contact and they’ve promised a payment and nothing comes in, it’s time to reassess your relationship with the client. You should consider stopping any future shipments or services to them.
4. Bring in the Professionals
Companies that hire a professional third party to handle overdue payments have a far better track record in keeping cash flowing in the right direction. In fact, taking on the debt collection tasks in-house can actually cost you more business than you think you’re going to lose by bringing a professional on board. Too many organizations fear that there will be backlash attached to bringing on a debt collection agency. The opposite is true. When you partner with an ethical and professional group, you can actually enhance your brand image and keep formerly late-paying clients coming back for more business, but making payments on time.
If you’re in the market for a firm that knows how to do it right, consider one that is a member of the Association of Credit and Collection Professionals. Omega-RMS, llc., is one of those firms. Contact us today and find out why businesses from many industries keep coming to us for our services.