Good customer relationship as the foundation
A good customer relationship is the foundation. Strive for open and transparent communication in which you keep your customer informed of his financial situation. If your business relation is also waiting for payment by one of his customers then ideally he should let you know. After all, one late payment should never be an excuse for another.
Don’t wait to send reminders until it’s too late. It’s more amicable to contact your customer a few days before the deadline. Specialised software applications can send automatic reminders: use this feature. You can also use this software to keep track of the various payment terms and conditions that may apply. If your customer doesn’t respond to your payment reminder a formal reminder is the next step.
Sometimes letters and phone calls are not enough to collect a debt. If you want to continue the commercial relationship with your customer in the future an amicable settlement is often the way to go. A professional debt collection agency can help you handle that procedure as smoothly as possible.
Postponement of payment
In many cases an amicable settlement means postponement of payment. In that case draw up a repayment plan that is beneficial to both yourself and your business relation. Your customer can repay his debt in instalments over a predetermined period. Often this involves late payment interest as compensation for the deferred payment.
Avoiding past due invoices in the future is a tough proposition but there is a way to guarantee your peace of mind. With a trade credit insurance you can rest easy: Euler Hermes monitors your company’s finances while you concentrate on your core business. The guarantee that the damage suffered will be compensated within 60 days relieves time pressure and leaves more room for negotiation with your customer and the search for fresh opportunities.