Customer delinquency management is always a top business concern. While most companies are very good about solving these issues on a case-by-case basis, many still struggle with making changes that help prevent the issues from reoccurring. The first step in solving the problems is identifying the root causes, and in some cases, your processes may even be driving some of these delinquencies. These are the five most common business practices that contribute to customer delinquency.
Your invoices are difficult to read
When customers receive your invoice, do they struggle to understand what they’re looking at? Do you list numbers that could be confused for the total or an itemized description that is hard to follow? Do you explain the fees and charges they’re seeing or just list them? When possible, try to make your invoices neat and easy to read. Avoid using jargon. Instead, use clear, common language that’s easy for your customers to follow. Make sure that deadlines for payment are clearly displayed, as well as any associated penalties for late payment.
Untimely invoice delivery
The later your bill arrives, the less relevant it is to your customer. As a result, you might not get paid until they need to do business with you again or are faced with consequences that can sour your relationship. Outdated contact information is one big reason for this, so make sure you’re taking proactive steps like outbound calling campaigns to keep your database updated. Or better yet, switch to electronic invoices. With so many customers accustomed to receiving their invoices this way, it’s become even easier to assume any physical mail is junk. Add text and email reminders to your outreach methods to stay in your customer’s mind and get paid sooner.
Your terms are unclear
When is the payment really due? What days are covered in your billing cycle? How can they make a payment? If it’s a high balance, are payment options available or does it need to be paid in full? When presented with unclear terms, many customers get frustrated and put the bill aside with the intention of paying it later but then forget about it. If you can’t spell out the repayment terms at the time of purchase or during the contract phase, make sure to do so when you present the final invoice.
You don’t have the right payment options
Convenient payment options, including auto-pay for recurring bills or online bill pay, are almost always expected by customers. Surprisingly, many companies still prefer mailed checks or in-person payments. Usually it’s because the technology to on-board more convenient options requires some investment and/or seems cumbersome to manage, but not offering these options is almost like encouraging customers to pay you later instead of now. By making payment more convenient for your customers, you’ll substantially increase the odds that they will take care of that important payment on time while also making customer delinquency management easier for you.
You don’t follow up
In the age of customer-centricity, many companies have become leery of reaching out to customers when they’re past due, but it’s usually more helpful to them if you do. The trick to getting paid while maintaining a good relationship is making sure you’re reaching out in the right way. Again, text and email reminders are low-cost, low-effort reminders that feel valuable and friendly. As more time passes, you can escalate from electronic reminders to calls and then, if you need to, collections.
Customer delinquency management is a common struggle for many businesses. Late payments can negatively impact productivity, tangle your cash flow, and make it difficult for you to take care of your own payment responsibilities. While it can be difficult to manage problems like disorganization on the customer’s end or a lack of funds, you can make sure that you’re doing everything you can to improve customer payment rates and make reaching your financial goals a reality.