As the owner of a business, you should always take a diplomatic approach to debt collection, especially when dealing with other businesses. But nowadays, it’s especially important to be diplomatic, because people at businesses can feel more stressed about finances.
A phone call with an aggressive tone or a wrongly worded letter can affect your standing in the business community. Moreover, it can make it more difficult to collect revenue on time. Thankfully, there are diplomatic ways to collect debt from other businesses:
Try not to put yourself in a position of vulnerability by researching your client before doing business with them. If they have a bad credit rating, a history of paying their suppliers late or have been struggling to meet operational expenses lately, then they may take longer to pay. If you must do business with such a client, then make sure that the contract is airtight, collect a payment upfront for riskier projects, and extend credit carefully.
#2 Stay Professional
It’s imperative to always remain friendly and professional with your late-paying customer, even if promises to pay on time have been broken. Remember to invoice on time and send periodic reminders. The invoice should be detailed yet concise and correct. Offer to waive late payment fees and offer discounts to incentivize them.
#3 Try Other Ways to Connect
If your customer isn’t responding to your invoices on email or letters, then give them a call. If that doesn’t work, then speak with them in person if it’s a large invoice. You can also use their social media pages to send them a message online. Alternatively, speak to someone else at the business. If the finance department isn’t responding, then speak to a friend at the company or the business owner.
#4 Partner with a Specialist
One of the best ways to diplomatically collect revenue from another business is to use the services of a professional commercial collection agency that takes a measured approach. Such a company will refrain from using unethical tactics such as shaming or harassing your customers. Instead, they’ll draw on years of experience, training, and skill to negotiate with them. An ethical agency that works across a broad range of industries and has a track record of success is more likely to successfully collect your revenue the way you want.
Another advantage of partnering with such an agency is that unlike your in-house collection department, they can report debtors to the three major credit bureaus if the situation demands it. Remember, businesses value their credit ratings. It affects their ability to secure important loans. A debt collection agency can also pursue legal action against your debtor. Of course, an ethical debt collection company will only resort to credit reporting or legal action with your permission.
While there are a variety of ways to diplomatically collect debt from another business, it’s also important to act on time. Studies suggest that debt can grow harder to recover with each passing day. When in doubt, use the services of professionals that adopt ethical debt collection practices to convert your unpaid invoices into cash while still preserving your relationships and reputation.