One Basic Of Debt Collection For Small Businesses: Talk With Customers

Accounting, Tax

As a small business leader, growth is a top priority.

Acquiring customers is hard but getting paid for work already accomplished is sometimes harder. Customers avoid paying for various given reasons, seldom because of bad intent.

According to Ohad Samet, co-founder and CEO of TrueAccord, the most common reasons are:

  • financial difficulties,
  • service issues, and
  • billing issues.

It’s not uncommon for small business owners or heads of billing departments to adopt an aggressive early stage collection process, hoping to then toss these clients over to collectors for another late stage “shakeup”.

Others just take losses as cost of doing business. Both extremes end up alienating or simply losing customers you could win back and potential top line growth you’re not tapping into. There are good reasons to set up a multi-stage, retention-focused process that collects feedback while trying to win those customers back.

The most pointed feedback about issues with its product or service comrd from customers who have stopped paying because of billing or service issues. They can give a small company valuable insights.

Talking to churned customers effectively can gain two things for a small company: recover money while learning important, albeit harsh, truths about their efforts. Even if customers ran into financial difficulties, providers won’t win any points by trying to force them to pay.

At this point, Samet suggests: don’t pick a fight - listen to what they have to say, understand their issues and complaints, and create a process to learn from them and change what needs to be changed. Providers still deserve to get paid, but small business leaders will discover a world of relevant product and process feedback, and maybe need to reevaluate their credit policy.

Samet offers these tips for following up on delinquent accounts:.

  1. Start in house to gather feedback. Take at least 30 days after the first late payment to reach out using your own brand and staff, working through a combination of email and light phone-based outreach if you have the resources available. This will give you a front seat to learning from customers while recovering the easiest balances without paying success fees.
  2. Listen, but be aware of what you’re owed. Accept potential issues and be open to various payment arrangements while stressing the outstanding balance. Learn from what customers are saying, empathize, and decide what payment terms you’re willing to accept beyond a payment in full.
  3. Escalate gently. After you’ve depleted your efforts, you can turn to a collection’s vendor - but don’t expect to be aggressive and “punish” your customer. Send a placement letter or email letting your customer know that they’re being transferred to an agency and give them another chance to work with you. Choose a vendor that gets your brand and will carry on naturally after you.

Debt collection for startups or any small business should be focused on soliciting feedback, not only getting paid but alsofocused on rebuilding relationships and getting customers back onto the company's client list whenever possible. By building a modular process, really listening and looking for solutions, and using great vendors, the company gets paid while continuously learning how to improve your product and processes.

Share