3 options to get paid by a customer who is avoiding you

Recently  one of our members told us about one of their customers who has been avoiding them when ever they chased for payment.  No matter what way they tried to contact the person responsible for payment , they couldn’t get hold of them. “no matter what number we called or which email address we used, we reach a voicemail or an email address from which we receive no reply”.

Unfortunately this is by no means an isolated incident and it is often the largest companies who are the worst culprits.

So just what can businesses do in this situation? Lets go through the options available.

Option 1: Persistence

No matter how frustrating unanswered calls and emails can be when chasing a customer for an outstanding payment, there is a possibility there are genuine reasons you haven’t been responded to. Perhaps someone is absent and has forgotten to leave forwarding instructions in their “out of office” settings.  Or perhaps there are technical issues. There are possibly valid reasons they may not have received or been able to reply to your message.

Each case should of course be judged on its own merits as to whether you afford that customer the benefit of the doubt. If they have a long history of missing payment deadlines, they’re probably stalling again. But if that customer has always been punctual and you have a good relationship with them, perhaps there’s more to it than first appears. Instinct often has a big part to play here, too.

You also need to take your own situation into account. If your business is really going to struggle without their payment, then that may force you to accelerate stricter action in order to resolve the situation such as referring the matter to us. If it’s a small invoice that isn’t fundamental to a positive cash flow, perhaps a bit more leeway can be allowed – just not too much, as you don’t want to end up consuming too much resource chasing a single customer. If in doubt, you could obtain a credit report  to see if there is any adverse information about them that might explain non payment.

Option 2: Threaten legal action

If you been chasing for sometime and they still are not responding but you believe they have the means to pay then the next step is to threaten legal action.  You could instruct solicitors to issue a Letter Before Action or LBA.  A LBA , is a letter sent to customers that signals your intent to commence legal proceedings in the event the invoice is still unpaid within  seven days and is a legal requirement.  If you’re convinced the customer is deliberately avoiding your communications to delay payment, then the threat of legal action can sometimes be enough encouragement for them to finally come out of the woodwork and pay the invoice.

No business wants to be taken to court if they can avoid it – a County Court Judgment stays on a business’s credit report for six years – and receiving this can shock them into putting your invoice to the top of the pile for payment.

However, it’s important that this letter isn’t used as an idle threat. You need to be prepared to start legal proceedings if the invoice is still unpaid when that date passes. You need to take account that if for whatever reason the debtor is unable to pay the debt or your costs then you will be left with the legal expenses.

You also need to take into account that threatening legal action will likely . Taking the legal route is viewed as a hardline tactic, so while it might secure payment it could also spell the end of your relationship with that customer.

Option 3: Instruct a debt collection agency

Another way to encourage your customer to pay any overdue invoices is to employ a specialist debt collection agency such as The Credit Protection Association Plc.

One of the biggest advantages of this approach is that the name of a debt collection agency when they first contact your customer is often enough to convince them to pay the invoice, passing the account to CPA’s Overdue Account Recovery Service can get the attention of your debtor and encourage them to come out of the shadows and address the issue. But if not there’s a lot more value a specialist can add.

Using a third party can also encourage your customer to communicate their reasons for non payment. By creating a buffer between you and your customer, the issue of non payment can be addressed without undue damage to the relationship you have with them. As a third party we can point out to your late paying customer with some authority, what the consequences of non payment will be.

Should our communications be ignored like yours was, a good agency then we can arrange for  trace and investigation agents to locate your customer and get through to the right contact.

Employing this tactic can greatly reduce the time and resources you expend on the collection process and it can also reduce the number of cases passed to legal action.

For the small percentage that are still unresolved by the CPA overdue account recovery service,  then CPA’s Litigation department can pass the matter to it’s retained solicitors on your instruction and they can prepare the LBA.

However using a credit management company like CPA can go even beyond that. CPA can help you instigate procedures and policies to prevent future customers from following the same path. The Credit Protection Association can also provide invaluable telephone advice to help you with individual troublesome accounts.

For instance, do you require all new customers to complete a Credit Application form the first time they are provided your goods and services on credit? And if so, how often are they asked to review and update their details?

The CPA Credit application forms are an excellent way of capturing the contact information of those responsible for paying you – namely the person’s name, email address, telephone number and postal address. You can even ask for a back-up contact in the event that person can’t be reached.

Do you then credit check all new customers and then continue to monitor them for changes using a service like CPA’s Status report & monitoring service?

Set a credit policy for dealing with late payment in the future. Have a process in place where you define the steps your business will take before you pass the matter to an external agency such as The Credit Protection Association. And make sure that is well understood within your credit control team. Also make sure your customers know what will happen in the event they fail to pay you within terms. If they are aware upfront that you are members of the CPA then it will get the relationship started in the right position and they will know the consequences of late payment.

If the above rings a bell and your customers are avoiding you, contact experienced team to discover how we can assist you.

James Salmon
14th September 2017

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