A business relationship can be just like any relationship. There's courtship, similar interests, a proposal, and the big day. On the day two businesses sign an agreement, excitement abounds at the potential of the relationship to add value. Unmet expectations and unresolved differences can quickly sour this relationship potential, leaving one or both parties unwilling to uphold their end of the deal. An unpaid invoice breaks down the relationship even further, leading you to question: Is it time to fire this client? Could you have predicted the end?
Not all relationships are doomed to fail. Situations and people change. Let's be honest - a business relationship isn't only between two large entities but also between the people and decision makers in the organization. There could be a whole number of reasons that put the relationship, and the ability to pay invoices, at risk:
The above warning signs should definitely signal that your client needs extra attention. It may be that you need to make more phone calls to attempt to draw out the whole story. You might need your sales team to get involved to re-establish contact. An in-person meeting, if possible, can also help to get answers. As one last step, you could opt to outsource an accounts receivable cleanup to an agency that can use firm but gentle means to collect before sending the account to collections. If it appears that your client refuses to pay and refuses to re-engage in any way, the next step is terminating the relationship.
If the work has been done, the product has been shipped or your company has completed its part of the contracted agreement, you still deserve to get paid. Once the decision has been made to fire your client, collections actions need to be taken immediately.
A reputable commercial collections agency will need certain paperwork or forms in order to move forward. For example, when placing a client in collections you'll want to have copies of the following:
To help the collection agency get started, your customer's contact information should also be shared with the placement. If the contact information is stale, don't worry. Your collections partner should be able to research the business for updated contact data.
Lastly, the agency should have a clear collections process and be transparent about payment outcomes and fees. B2B collection agencies charge different fees so make sure to hire a corporate collections agency that meets your requirements. If you have any questions about your collection options, feel free to contact us. We'll be happy to help!
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