Being an owner of a small business, you would by now know the significance of ‘delinquent accounts’ whenever your first customer didn’t pay for some service on time. Cash flow is pretty essential for a business’ well-being, particularly during the initial days and having even a few delinquent customers can always has an adverse impact on the cash flow. For someone who doesn’t know what delinquent debt is, it is debt which is owed for more than a month or 30 days by a party (who is the debtor) to another party which is the creditor.
Debt collection becomes aggressive as the time of the due debt increases. There are borrowers who can’t pay back loans on time even when they get very low interest personal loans. But how can a creditor or a businessman get back money on delinquent accounts? Here are few tricks.
#1: Try and be tough yet friendly
For all those customers who have built up great excuses for not being able to make payments, it is easy to feel sorry. They might have a sick child at home or they may have been suddenly laid off. But you have to be firm so that the customer or the borrower doesn’t take undue advantage of you. Offer some compromise or an arrangement plan but don’t give in to their excuses.
#2: Send them a mail or write a letter
If you personally don’t wish to confront the customers or borrowers who have already become delinquent, you can either mail them or send them letters to remind them of their payments. Don’t be too demanding and give them enough space to get back to you in case they’re going through some grave issue.
#3: You should have a policy for delinquent accounts
If you have to often handle such delinquent borrowers, it’s vital for you to have a written collection policy before you sell another service or product. It is only when you have this that the customers and borrowers will know what to expect when they are not able to pay. Spell clearly the way in which your business tackles collections and allow the new customers to sign such a policy before lending new lines of credit.
#4: Following up is necessary
It is also pretty easy that there will be few delinquent borrowers who you might slip as you’re pretty busy with everything. But nevertheless, it is always vital for you to follow up. Send them reminder letters every 7 days and you can also give them a phone call to remind them.
Therefore, no matter how big or small your business is, you have to ensure having no delinquent customers as they slow down the growth of a business. Try the tricks given above to make them pay on time.