When your trying to collect money from people who owe your company, you have undoubtedly heard these sayings:
“The check is in the mail.”
“Give me a call later.”
“There must be a mistake.”
What is the real objective of these delinquent customers? The debtors are trying to buy themselves time, perhaps hoping that if they wait it out, you will no longer have the desire or patience to pursue their claims. They may figure your company will ultimately write off their account as a bad debt.
Industry data shows that the probability of a debt collection drastically diminishes after 90 days. Non-paying customers who play the waiting game know this and hold off, so they can improve their chances of getting off the hook.
In any creditor relationship, debtors have the upper hand usually because they know when — or even if — they will pay. They can also take steps to forestall or evade your collection efforts. Is there anything the creditor can do? Yes!
Gain the upper hand by removing or minimizing the risk of loss. You can do this by requiring the customer, in writing, to be contractually responsible for all of the related costs if the account is placed in collection or litigation.
Take this step at the beginning of the relationship before extending credit to unknown and new customers. Make sure it is clear. By shifting the cost responsibility to your customers, you make them think twice about ignoring your billing statements.
Please talk with us about strategies that may help you get your customers to pay in a more timely fashion.
Hoberman & Lesser’s NYC accountants serve a broad cross section of businesses, ranging from publicly held companies, to private sector businesses, to individual entrepreneurs throughout New York, New Jersey, and Connecticut, and across the United States. To schedule a complimentary and confidential consultation with a member of our team, please contact us.
