If you've ever found yourself increasingly frustrated at a client who just won't pay, you may be considering taking them to court. You do have options before taking the legal route but if those options are exhausted, you may be too. If you're still unsure if it is indeed time to pursue litigation of your nonpaying client, you may be looking for a nudge in the right direction.
When your accounts receivable department could use some help, it will show up in a number of ways. You may notice your sales are increasing but your cash flow isn't covering your bills. Bad debts are written off or your DSO keeps increasing. To grow your business, especially if you want investors, you must make accounts receivable a priority, collect bad debt, and use legal action to collect what's owed to you.
When clients aren't paying their invoices on time or at all, many businesses will write it off as bad debt simply because of the resources involved with collections. Some business owners are concerned about using a commercial debt collections agency because of the cost or complexity. There may also be apprehension due to mistrust of proper handling the client relationship. Depending on the agency, commercial debt collections doesn't have to be complex or costly.
Here's how your business can send commercial customer accounts to collections.
A recent global study revealed that American businesses get their invoices paid in an average of 23.5 days compared to businesses around the world. Small to medium businesses in Canada, the Czech Republic, Germany, Hong Kong, France, Ireland, the Netherlands, the UK, Singapore, and Poland were also surveyed. Business invoices in France and Singapore were paid on average in 45 days. Comparatively, these figures are positive but late payments are still a problem in the United States.
Trying to find the best collections agency for your business can be a challenge. It would be nice if your business clients would pay on-time for the services or products you've already supplied. The relationships with those clients are still important and you don't want to break those ties with a court battle.
When you sign an agreement with a new client, the assumption is that they will hold up their end of the bargain and pay their invoices. Unfortunately, things don't always go as planned. If your client isn't paying, there are steps to take, before going to court, that could save the time and resources of litigation.
To increase your chances of getting paid, follow the steps below.
When selling anything that requires ongoing payments, there could be a challenges in collecting those payments. Businesses selling software-as-a-service (SaaS) receive a monthly or annual fee from clients who have purchased a subscription. The client may claim that they no longer use the service or a variety of reasons for nonpayment. Anytime a client is contractually obligated to pay for a product or service, whether they use it or not, the account can be sent to collections.
If your business is selling software or any other subscription model, you do have recourse for non payer churn.
How often do you call a business and find yourself stuck after "press 1" for this and "press 8" for that? Technology can be a wonderful resource but are businesses ready to rely on fully digital systems? A recent USA Today article highlighted new technology and stated that some debt collections could be handled without human interaction. When your business relationships are at stake, we beg to differ.
Business suppliers, vendors, distributors and manufacturers typically have their own industry jargon. There's an expectation among those who "speak the language" that in a business relationship, you'll have a solid comprehension of how that industry works. Debt collections is no different. Businesses seeking to recover past due accounts receivables will search for debt collection agencies they can trust, who comprehend their industry specifics and who also speak their language.
