What to Do When Your Customers Won't Pay Their Debts

What To Do When Your Customers Won’t Pay Their Debts | Image Source: businessnewsdaily.com

Acquiring customers for any business can be challenging. This is even more difficult for a new business that’s still trying to gain market acceptance, acquire loyal customers, and also build its brand into something of value.

While the customer acquisition phase can be a real pain, customer retention becomes the next hurdle every business must face.

To successfully acquire and keep customers, a lot of businesses embark on different marketing strategies from offering freebies to giving out first-time discounts, introducing time-sensitive deals, offering free consultations, and even to the point of selling their goods on credit, to be paid later.

These sales strategies have proven to be effective for decades, but comes with their own perks, especially selling products or services on credit. The problem this possesses is most creditors pay really late, while a few never pay at all.

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If you’re stuck in the situation where you have a lot of unpaid invoices that are weigh past their due dates and are not sure of what to do to get your money back, here are 5 things to do when customers won’t pay their debts:

See Also: This Is Why Your Customers Are Not Paying You

 

Step 1: Remind The Customer

Sometimes a few customers don’t pay because they’ve simply forgotten that they have outstanding payments to make. In this instance, the first course of action is to remind your customers that they have pending payments to be settled.

A customer who genuinely forgot would apologise and give you a timeframe in which they might make the payment, while others may simply apologise and only give a vague reply or an excuse on why payment hasn’t been made yet.

 

Step 2: Resend Their Invoices

If they still haven’t paid after a gentle reminder, resending their invoices to them so they can see what they owe is the next course of action. For those who claim they can’t locate the initial invoices issued to them, you can get them back on track by resending their invoices to them.

Doing this makes a lost invoice excuse to immediately become useless.

See Also: Overcoming These Challenges Will Make Your Business More Successful In 2017

 

Step 3: Set A Deadline

If your debtors still refuse to pay and are now avoiding you in all ways, send them a message giving them a deadline. If you run a service based business where they get to pay a monthly subscription for an important service used, let them know they have about 5 more days to pay up or they’d get disconnected. If it’s not a service based business, you could remind them about the contract they have with you and what consequences awaits if they don’t live up to their obligations.

 

Step 4: Engage A Debt Collection Agency

Debt collection agencies usually buy off a bad debt from an institution, then go after the client involved. In Nigeria, the most popular is the Asset Management Corporation Of Nigeria (AMCON), and they’re largely known for purchasing bad debts from financial institutions, followed by a forceful takeover of the business involved in the debt issue; all in a bid to recover the money.

See Also: The 5 Critical Stages You Will Go Through As An Entrepreneur

 

Step 5: Press Charges

After all is said and done, and the customer still refuses to pay the debt owed, the last resort would be to file a law suit against the individual or organisation. Doing this gives you the full weight of the law to ensure you get paid what you’re owed, and perhaps even a larger sum for the time and resources wasted in trying to retrieve the money.

 

To Sum It Up

While no one hopes to encounter credit customers that never pay their debts, they do exist, and in great numbers. If you’re experiencing this problem, you could start by following the steps listed here, while hoping that it doesn’t get to the very last point of filing a law suit against your debtors.

 

What are your thoughts on these 5 steps to take when your customers won’t pay their debts? Let me know by leaving a comment below.

 

 

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