Debt is uncomfortable for business owners. When is the last time you enjoyed talked about someone or some entity that owes you? In my experience it is close to impossible to discuss it without bringing emotion into the mix, even if you are the credit manager.
If you aren’t in business where you have deal with your books then think about it on a personal level.
Reason #1: No likes to talk about debt.
Debt is sticky.
Once you have to work harder than needed to get your funds your business relationship immediately becomes different, it’s human nature. Non-payment from anyone leaves a residue behind that is tough to shake.
While you can’t change the debtors (the folks that aren’t paying you) of the world but you can change how you manage your expectations, your communication, and the facilitation of payment.
Talk to others in your field and see how they handle their non paying customers.
Avoid leaving money on the table by trying harder to get ahold of the debtor and make something happen.
If you know yourself well enough to know that communication is not going to happen, then get help. In the form of an employee that can manage this ongoing issue or a collection agency that specializes in getting involved early.
Even the smallest balances can have lasting effects on any business and they can begin to compound before you know it. Timing paired with communication is a one two punch that keeps your books happy.
Reason #2: You.
If you think your debtor is the only party at fault for non payment you are wrong. The fact is that you granted that line of credit, that service, or that product and as such you are as much a part of this mistake as the debtor not paying. Once you adjust the scope of responsibility, then and only then will the cycle start working.
Every debtor is an opportunity to revisit your credit cycle and make tweeks. Arm yourself with more data, better data, more safe guards, or execute faster.
If your efforts are getting ignored internally then chances are things aren’t going to change in the next 15-30 days with you. If you have communication then you are on the right track but anything short of communication more than likely it is better off in the hands of pro armed with a scary letterhead.
And when it comes to the conversation after you pass them to third party don’t be shy.
No one likes explaining why they were forced to pass a client to collections, its a tough conversation all around. I have been there, it can be terrible. In the end the debtor is more to blame and frankly if you have them complaining you have them talking. More than half the time the hardest part is getting them on the phone. Find an arrangement that works, give the agency their dues, adjust their credit and think about the total credit cycle and move on.