Could Chasing A Debt Affect My Reputation?

Chasing payment is always a challenge. No matter what you do and what systems you put in place, it seems like there will always be that one customer who pays late, putting you in the difficult position of having to chase them for money. But for many business owners, this is a challenge they aren’t sure how to handle. It’s an awkward conversation and always has the risk of permanently damaging the relationship you have with that client, particularly if the client is a serial late payer, or owes a substantial sum. So should you leave it and not chase the debt at all? We’re here to weigh the options for you.

What Chasing A Debt Will Do

First, let’s look at what happens if you do chase a debt. The first thing is you will probably get payment out of it. That’s the biggest benefit really! Chasing the debt means you are alerting the customer that payment hasn’t been made, and letting them know that action needs to be taken. If you don’t feel comfortable doing this yourself, then you can always hire a debt collection agency to act on your behalf. They will take on the task of chasing overdue payments and managing the recovery process, protecting your reputation and giving you more time to focus on your work.

The Negatives Of Not Chasing A Debt

Now let’s look at the flip side. What happens if you don’t chase outstanding debts, and instead leave them for the client to pay as and when they feel like it. Well for one, you will probably never receive payment for the work you’ve done or the products you’ve provided. Your cash flow will be impacted, and you will be out of pocket in the long run. On top of that, you risk making a bad name for yourself in the market. Reputation isn’t just about keeping good relationships with your customers, it’s also about standing up and doing what’s right. If word got out that you are any less than diligent with your overdue debts, other businesses could avoid working with you, or look to take advantage of you.

When you look at it like that, it’s much riskier for you not to chase any debts at all.

Our Top Chasing Tips

• Ask For Payment. The first step is simple – just ask for payment! While some late payers do so intentionally, many are often the result of something else – an issue with the bank, clerical error, the invoice being misplaced or forgotten. Sending a friendly reminder shortly before payment is due is a good way to ensure that everything is on track and they remember about the due payment. If it then becomes late, you can start the chasing process.

• Automate Due Reminders. One of the ways many business owners avoid losing face or offending their customers is to automate late payment reminders. Many kinds of accounting software offer this functionality, and it basically means that all payment-chasing reminders are sent by an automated system. This has 2 advantages – the first is that neither you or the customer loses face since a computer is issuing the reminders, and not by you. The second is that you will never be late reminding them of the overdue payment, which leaves you in much better standing.

• Reference Agreed Terms. This is where your terms, conditions and contracts are your best friend. When writing your payment chasing emails, make sure you are referencing the terms they agreed to when they enlisted your services or ordered your products. This will remind them that they signed a legal contract to pay for these services, and if they have no grounds to challenge it, remind them that they need to pay now.

• Choose The Right Time. When chasing for overdue payment, timing can be everything. Many businesses, particularly larger ones, tend to do payment runs once a week. Find out when your customer does their payment runs, and send your reminders just before. For example, a lot of businesses do payment runs on a Friday, so Thursday morning or early afternoon is often an effective time to chase.

• Attach The Invoice. When you are chasing payment from your clients, make sure you give them everything they need in order to pay you – or else they won’t. So make sure you are attaching the overdue invoice to your emails, referencing how they can pay you in the email and providing links if you take payment through a portal. Doing this will prompt payment from most late payers.

At Debtcol, we work with businesses who are struggling with late payments or bad debts to recover the money they are owed. Our team are experienced in all aspects of the debt recovery process, including both payment chasing and the legal follow-through procedures that may be necessary. For more information on how to prevent late payments, or to find out how we can help you recover your hard-earned money, Just get in touch with one of our advisors today.