Figure out what’s behind Non-Payment, so you can stay on top of it!
Sometimes, a non-paying customer’s behavior is a mystery. You have a good working relationship. You’ve communicated clearly. You’ve made your terms clear. You’ve delivered the goods and maybe even far exceeded expectations. But your follow-up attempts fall flat as you wait patiently to be paid.
The reasons for non-payment can be as unique as each customer you deal with, but there are 5 reasons that we hear most often.
The benefit of knowing these reasons is this; Once you understand what’s behind the behavior, you can come up with a solution that fits the problem.
The problem: An Expectation Fail
Some customers stop cold when they receive a bill they weren’t expecting or a charge that is higher than anticipated. They see the amount due and immediately the blood starts to boil.
Rather than pick up the phone and clarify the charges with you, some customers just choose not to pay. From the customer’s point of view, unexpected charges can feel like a rip off, and that’s the last thing you want them to feel!
The solution: Don’t surprise your customers.
The only good surprises in life are the ones dipped in chocolate. Invoices that are bigger than expected don’t qualify as good surprises. Even chocolate can’t fix that.
Charge Orders that outline further costs before the services are rendered are one way to eliminate unpleasant, problematic surprises. Make the form easy to read and the process quick and painless so you don’t jeopardize your customer’s deadlines.
The problem: A lost invoice
This may seem like one of those the-dog-ate-my-homework excuses, but the reality is, invoices sent by way of email can and do sometimes end up in the SPAM folder. Invoices sent by mail can and do sometimes end up on the wrong desk. Changes in personnel alone can cause confusion in the routing of an invoice.
If it’s appropriate and possible, request a confirmation of receipt when you email invoices. A quick phone call to confirm the invoice has been received will also do the trick. Establishing a connection with the person responsible for paying invoices will help to create a routine that gets you paid. And over time, you may find phone calls of this nature become unnecessary.
The problem: Lack of intent or ability to pay
Our previous article, Extending Credit 101 expresses the importance of the work you do BEFORE you extend credit. In it we outlined the steps in weighing a customer’s intent to pay. Armed with information, you can make a better credit decision about a new customer.
But that doesn’t eliminate risk. There’s always a risk. What you need to know is how much of a risk so you can decide whether to engage with him or not.
Unfortunately, even if you take every step we outlined in the article, you can still end up with a customer who can’t or won’t pay.
The solution: Talk
Get to the root. Find out what is at the core of the non-payment. Make a personal visit if necessary. Maybe there’s been a misunderstanding that a conversation can solve. You may hear a sob-story, but it may be one with some validity to it and if handled properly, will open the doors to building customer loyalty in the end.
Only when you gain understanding of the cause can you come up with a solution that’s fair to both you and your customer.
The problem: Bad memory
If you’re a busy business owner, you know what it’s like to juggle a lot of things all at once. Forgetting to pay an invoice happens now and then. In some cases, knowing the back story will help you see how it happened and set your mind at ease. Even so, you don’t want it to be your invoice that gets lost in the fray and you certainly don’t want to be routinely forgotten.
The solution: A simple reminder
There’s no magic in this simple solution. You make a phone call or send a friendly reminder email. For the routinely forgetful, you’ll need to create a habit of follow-up.
Contact them when goods are delivered to be sure all is well with the product or service you provided. Contact them when you send the invoice to be sure they received it. Contact them if they’re late paying you. Contact them on their birthday if you have to. The key is to stay top of mind with the forgetful customer.
The problem: Unhappy customer
Wouldn’t it be great if you never had a dissatisfied or disgruntled customer and if every single one was deliriously happy because of your amazing product or service? All the time? Every single day?
But alas, you live in the real world where things happen that can result in dissatisfaction.
Confrontation is uncomfortable. Therefore, an unhappy customer may avoid contacting you with a complaint, choosing instead to ignore an invoice. It’s a non-solution to their problem, but it doesn’t stop some people from sticking their head in the sand.
The solution: Preemptive strike
As a business owner/operator, you make practices and procedures part of your business routine. To stop a problem before it starts, you may implement a feedback process that gives your customers an open door of communication with each service rendered.
The word “feedback” is a friendly word that connotes a teamwork approach to better customer service. It communicates to your customer that you’re eager to hear her opinions, that you value them and take them into consideration as you improve your business. It’s empowering to your customer and provides invaluable information to you that can solve problems before they even exist.
You’re going to face non-payment at some point. Find out what’s behind it so you can get on top of it!
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