Being consistent when chasing debtors will help you to recover debts while maintaining good customer relationships. You should be contacting customers quickly about overdue invoices. If you offer payment terms of 30 days, begin following up as soon as payments are overdue.
We recommend the following steps when chasing an overdue payment (remember, this is debtor management and not debt collection at this point in time)
- Telephone the customer and remind them to pay the debt. Ask them if there is a problem. If they offer no reason, ask them to settle the debt by a specific date.
- Send a statement requesting payment and indicating this is a reminder or final notice.
- If there is a cashflow problem, try to arrange a payment plan that suits both you and the customer.
- If this problem with overdue payments is ongoing, review the customer's credit terms i.e. insist upon cash on delivery.
- If the debt is not settled within the agreed time, you may want to consider mediation, debt collection services or, as a last resort, legal action (which can be very expensive).
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