In a perfect world, customers would settle invoices on time, every time. But unfortunately, that just isn't the way it happens in real life.
We have to be prepared for occasions when customers do not pay on time, or simply refuse to pay at all.
B2B debt collection is altogether different from B2C debt collection, and it can prove challenging for credit professionals. With commercial collections, invoices are usually larger, contracts can be in place, and relationships established. Therefore, it is helpful to ensure you have clear processes in place to help allow things to run smoothly, where possible. Business to business debts can have a greater effect on your bottom line - and could even put your company’s own stability at risk, in the case of substantial clients. You should never delay in pursuing B2B collections, and indeed if necessary, enlist professional assistance if required, as it can help you get your budget back on track.
Here are some suggestions to help expediate your B2B debt collection processes:
Keep track of your customers
Having a system in place is your first line of defence in avoiding accruing too many outstanding invoices. Keeping a record of all interactions with a customer can help to build a picture of what your relationship with the client is like and will enable you to address disputes swiftly, effectively as well as access any information you may need about the client easily.
Keep records of signed (or with written agreement to) terms and conditions, notes of when invoices were issued and reminders sent, receipts of any mailings, all related emails, and notes from telephone calls once a business goes past their invoice due date. In the event that you do have to turn to a B2B debt collection agency, having this information will enable them to proceed more quickly on your behalf and increase your chances of having the full amount you are owed, recovered.
Preserve Business relationships
When a business is pursuing an overdue invoice from one of its clients, dialogue needs to be kept professional, with the preservation of relationships in mind, as well as protecting your brand’s reputation. Keeping communication calm can help you reach a more desirable outcome, even though this may be frustrating when you are being given excuses for non-payment of an invoice.
When communication does break down on both sides, it can become difficult to move forward with a resolution at all, but it’s important to try and keep in control of the situation, with the right balance of forbearance, professionalism and courtesy.
When your internal attempts at recovering a debt are not successful, then sometimes all it takes is a detailed letter from an experienced b2b debt collection agency to prompt the business owner into action. With the right approach – which should avoid any threatening language and clearly explaining the details of the overdue sum - the company is more likely to reach out and settle the debt, rather than risk further – possible legal - action.
Consider your options
If a debtor in unable pay right away, it is important to keep contact going as they may be able to pay in the future. While the older a debt becomes, the harder it is to collect, sometimes circumstances change and payment may become feasible. If a customer is having trouble paying off debt, it might be possible for them to make payments over time. The goal is to get them to pay the entire debt as quickly as possible. Listen carefully and consider offering options until something workable is defined.
If a payment plan has been agreed to, get it in writing as well as verbally summarising the plan for the client. This summary should include specifics of where the client should send each payment, and what form of payment will be used. Having clarity will reduce misunderstandings and hopefully lead to a quicker, cleaner resolution.
If you’re struggling with a customer who hasn’t responded to your debt collection efforts, Controlaccount can help. We provide fast, effective B2B debt recovery services for leading global brands, SMEs, public and not for profit organisations. We focus on improving your business cashflow, preserving customer relations and protecting your reputation.
Our strategies for debt collection include a no collect, no fee approach and – for b2b overdue sums – we can apply the Late Payment of Commercial Debts (Interest) Act 1998 and the Late Payment of Commercial Regulations Act 2013 (LPA). This enables businesses to recover the cost of chasing overdue accounts by applying interest charges –resulting in you collecting 100% of monies owed, rather than a proportion.
FAQ - Pay a Debt
