Collecting When a Debtor is Also Waiting
“You’ll get paid when I get paid.” Sound familiar? This is an often heard excuse when it comes to collecting on a late bill. If your client is also waiting on money to come in, it can be frustrating to learn that they won’t be able to pay you until then—or are at least unwilling. There are a few options on how to respond when this happens, and can easily make or break your work relationship and future project connections.
Option 1- Hardball: One no-nonsense way to respond to a reluctant debtor with the above explanation is to simply not care. If they agreed to pay for your specific service in a period of time, then they should have been prepared to make the payments no matter what. Their outside business constraints aren’t your concern, and you can threaten extreme consequences if they don’t pay up soon, or else.
Responding this way can be effective, but if the debtor is telling the truth and they simply can’t pay right now, you’ve completely shut down any cooperation they might be willing to make with you, and it will be far harder moving forward to get your payment in any reasonable amount of time. You’ve also lost a business contact in a market where maintaining customer loyalty is vital to your success.
Option 2- Look Deeper: Once you’re given a specific explanation as to their flagging business, it’s our job to tell if they actually just need a bit more time, or are stretching this deal out for all it’s worth. Rather than jumping on the offensive, it can be very valuable to your business and work relationships to thank the debtor for acknowledging the money owed and their dedication to paying it as soon as possible.
Then you fully document all interactions; setup a system by which you agree in writing about the amount still owed, as well as their satisfaction with the services provided. If they come up with other reasons for not being able to pay in the future, this will go a long way in protecting your assets against future unpaid bills.
How to tell if it’s true: There are a number of ways to tell if a company is using their own unpaid bills as excuses, or if it’s truly rendering them unable to pay only in the short term. We’d look into the amount and due dates of their receivables, the number of customers that are causing the problem, their history with those customers, and the likelihood of getting paid soon or ever.
Once it’s understood what the problems look like on their end, it’s much easier to tell how much their financial status will affect your own. You’ll be able to tell if what they’re saying is accurate and the business relationship should be held onto to ensure you get paid, or if it was once legitimate but has changed over time. If it’s just an excuse, we will work to reclaim your payments as efficiently as possible.
If you are having issues collecting from a business partner, there are options and strategies that can be explored to help you get the money owed to you. Here at CMCS, we tailor our collections services to meet your specific needs to find a solution that works best for you. Give us a call at 800-223-6259 to learn more about what we can do for you.