I got a call from a client in the food business today and he reported that his suppliers have started calling customers if they are one day late paying their invoices.
Grace periods have been tightened. An invoice due in 30 days a year ago, is now due in 15. If the invoice is not paid, the customer goes on COD terms.
I told my client he should be doing the same thing. Communication with your customers is always a good thing. Remind the customer that payment is due, and use the opportunity to make another sale.
One of the things that has always bugged me about the debt collection business is that the players often make it instantly adversarial. It doesn’t have to be. You truly do get more flies with honey. It’s important to remember that a company that is struggling isn’t necessarily a bad company.
We get some business from collection agencies which refer cases to us in MA after their collection efforts have failed. Most of these agencies do a great job. On occasion though, the collector has made things so adversarial that the debtor refuses to pay the bill “on principle”. That is simply a dumb situation to get into. I can think of four or five matters over the years where a debtor has agreed to pay the bill instantly, saying that the only reason for the delay is that the collector was so rude to him. We all have our off days. But if you are feeling angry, do not call a debtor. (Then again, it’s an easy victory for me!)