5 Pointers to Address Non-Paying Customers

The news may say the economy has turned around, but that doesn’t mean your customers aren’t still feeling pinched. The tight economy may be one reason why you might encounter a non-paying client, but there can be as many reasons as there are customers. Combating attrition due to non-payment requires understanding and addressing the underlying reasons for non-payment.

Here are a few ways address the issue:

1. Have a Process

Even if you’re a one-person company, having a clearly defined process for dealing with late payments will assist you greatly. Chasing money is time-consuming; having a process in-place will cut down on the hours spent re-thinking your approach every time. Saving both your time and your profitability is important.

2. Contact the Client Immediately

Contact the client directly either on the day or within a certain number of days (back to your process) after the payment becomes overdue. Using the telephone rather than sending an email is more effective. During your conversation:

•State you have not received payment and ask whether they had problems paying.

•Ask when the payment will be made and ask them to agree to a date. If they don’t know, let them know (politely) that you will call within 48 hours so that they have a chance to investigate and let you know what they can do and when.

3. Nudge the Customer a Little

If payment is considerably delayed, write a formal letter stating a date when late fees will start to accrue. Often, this will get the attention you need to move them “off the dime.”

4. Accept the Loss with Grace

If you’ve followed the first 3 steps, but negotiations have broken down and you can no longer reach the customer after repeated attempts, write another letter letting them know you have no choice but to withdraw your services.

5. Notice any Patterns

Finally, is there a certain zip code that has a higher percentage of non-paying customers, perhaps a certain home or apartment size where you start to notice a pattern? If so, pay attention to the sales process, perhaps you have not qualified your leads well enough and this is a “red flag.”

If you follow these five steps, you’ll come to realize that as long as you follow your process, a non-paying customer will be the rare exception, and will not affect the overall health of your business.