Nobody likes those words: delinquent accounts. Just hearing the phrase makes most business owners cringe. Delinquent accounts are synonymous with many things: a lack of cash, strained customer relations, losing sleep, unknown pay days, etc. etc. Delinquent accounts are something NO small business owner should be dealing with, however, over half are. Recently, small businesses have been THE hot topic (as they are the backbone of our economy). Capital Hill can’t stop talking about them. What are the presidential candidates agendas for small businesses? How can we give them credit? How can we make it easier for them to get loans? Can we cut their healthcare costs? Cut their taxes? Everyone wants to help small businesses by giving them something they don’t have. But how about just helping them better manage the things they do have? That’s right. If small businesses just had the resources to help collect faster and more efficiently from customers, the effect it would have on their business’ financial health is astronomical.
It’s easier than it seems. Although many measures can be taken to help prevent delinquent accounts, the real challenge is handling those delinquent accounts that already exist. Follow these 3 steps to make collecting delinquent accounts the easiest thing you’ve ever done.
Delinquent Accounts: The 3 Simplest Ways to Get Them Paid Fast
1) Follow up promptly and persistently – How are your customers supposed to remember their payment is late if you don’t remind them? You’d like to think they could remember when they have a payment due. However, these accounts are delinquent for a reason. Maybe they did just simply forget. Remind them. Problem solved. Maybe they are trying to extend their payment date for their own cash flow needs. Just because they can’t properly manage their cash flow doesn’t mean you should allow it to negatively affect yours. Remind them (again and again until you get paid). Why should you not let up? Because even if they do remember they have a payment due, if you stay on top of them it will let them know how serious you are about your payment. A customer won’t mess around when they see how aware you are of delinquent accounts. This communication will help keep you on top of their payment priority list.
2) Use effective language – Words are a powerful thing. Don’t forget this when contacting your customers about delinquent accounts. Be strategic and cautious in the wording you use when first notifying your customers that their payment is late. A study by Freshbooks shows that just by being polite, you can increase your chances of getting paid by 5%. A simple please and thank you can go a long way. However, not all your customers are in the same boat. Some are paying late for the first time ever and others are notoriously delinquent accounts. That’s why you need to stray away from generic payment reminder letters. You must craft these letters to fit the situation. Utilize these collection letter templates to help remind customers no matter the payment situation. When you reach out to remind customers, mind your manners and be sure to consider the situation before mailing.
3) Make it easy to pay – If you’re trying to get these delinquent accounts in as soon as possible, think about what will help with speed. The number one solution to any situation like this is to make it easy. The easier you make it for someone to do something, the more likely (and FASTER) they will. How do you make paying more convenient for your customers? Offer them options. Don’t allow checks to be the only way they can get money to you. Make online payments available. Accept credit cards and direct debit. By providing your customers with options, you’re giving yourself a huge advantage. They’ll be able to pay you faster because they literally have a speedier way of doing so. Not to mention, the convenience helps keep them from pushing your payment to the side.
There is nothing fun about delinquent accounts and, yes, there are ways in which you can prevent them, but it’s important to know how to fix a problem that already exists. Get a handle on your delinquent accounts by using consistent reminders, strategic communication and online payment options. Seeing those delinquent accounts get paid will be worth it.