The Biggest Barrier to Collecting Business Debts

Filed in Business Management, Education, IBS by on January 28, 2016 0 Comments

12 hours clock

“Time is the greatest enemy against collectability,” according to Thea Dudley, vice president of financial services and customer care at Guardian Building Products in Greer, S.C.

This opening statement spoke volumes during a recent seminar Dudley led at the 2016 International Builders’ Show in Las Vegas where her focus was to help builders learn how to improve their collections process from vendors and customers.

“The more time you give [the customer to pay], the greater the risk,” she added. Dudley urged builders to do the following:

  • Bill promptly and correctly.
  • Set expectations with the customer regarding the billing process.
  • Follow up with the customer and hold them accountable for making payments on time.
  • Be persistent and ask open-ended questions. (Example: “Why haven’t you been able to make your payments? And, “What do we need to do to get this straightened out?”)
  • Plan out your next steps.

To reduce collection issues, Dudley suggested the following tactics:

  • Initial inquiry call – ask the customer if they received the invoice and if they have any questions.
  • Follow-up call – offer solutions and hold customers to their commitments.
  • Subsequent follow-up call – tell the customer their payment is important and offer to send your sales representative by to collect, for their convenience.
  • Documentation – write everything down to document all actions, including phone calls, emails and texts.

To ensure customers pay their debts on time, Dudley said that builders should consider charging interest on overdue bills, start collection work immediately when bills are past due, and don’t provide additional services to the customer until their payments are up to date.

When all else fails to reasonably address delinquent payments, Dudley said the next steps could include:

  • Sending an attorney demand letter
  • Filing a mechanics lien
  • Using a collection agency
  • Engaging in mediation or arbitration
  • Taking the case to small claims court
  • Engaging in litigation

NAHB members who have general questions regarding legal concerns can reach an attorney on staff at legalaffairs@nahb.org.

 

Leave a Reply

Your email address will not be published. Required fields are marked *