Default in cases: expert opinions

Default. In other words, late or no payment. In these times, entrepreneurs have to deal with everything, whether you have a non-paying customer or are unable to meet your payment obligations on time. Paying and being paid, how do you deal with it? Expert advice from Graydon’s Robert Blom. Did you know that payment ethics differ per country? For example, Robert Blom’s book Get more profit from your company shows that Southern European countries have worse paying rates than Scandinavian ones. A typical case of manana thinking, or the famous southern relaxed attitude that if not today, it will happen tomorrow? Not necessarily. Research from the same book by Blom shows that the debtor who arrives late often simply does not have sufficient financial resources. But bureaucracy also plays a role, for example reflected in a payment process that involves too many instalments, so that the invoice can remain on a desk for a very long time. Although inability is the problem in many cases, there are certainly customers who are careless or even deliberately pay late in order to, for example, have interest on accounts credited to their own account for as long as possible.

You are the debtor

Although it might seem advantageous at first glance to postpone payment for as long as possible or a little longer, don’t miss it, Robert Blom advises. Anyone who pays on time will experience extra goodwill, especially among smaller entrepreneurs: the supplier will be happy to make an extra round for you if he knows that you will pay on time and correctly. A supplier also sometimes offers a discount if you pay within a certain period. This can also be beneficial for you. If, due to some circumstance, you are in such a tight spot that it becomes really difficult to pay a certain bill, then the worst thing you can do is play dumb and hope that the other person doesn’t notice for as long as possible. In case of payment problems, always consult the creditor in a timely manner. They often prefer that a specific payment schedule be agreed, whereby you pay the bill in parts, for example, rather than simply not knowing anything about the settlement of the claim for a long time. In all cases, be careful when taking out loans, and always know what you owe others at any given time. Credit is not free money, but a burden on your shoulders that must be paid off sooner or later. Don’t let that surprise you.

You have the debtor

According to figures, smaller entrepreneurs in particular are often surprisingly lax in monitoring payments. Just to maintain good relations, or simply to get rid of the hassle, people sometimes wait a long time before collecting receivables and addressing business partners about their payment behavior. However, the advice from Get more profit from your company is to maintain a debtor policy in all cases. This means that you have a fixed plan regarding a number of questions. First, you decide whether payment discounts will be given to quick payers, and if so, how much. It must also be determined in a systematic manner at what point a debtor will be held accountable for poor payment. If an initial reminder has been unsuccessful, it is possible to calculate interest on the outstanding amounts, or to issue an interest note. In addition, it must also be decided at what point a claim will be issued and processed by third parties. Several entrepreneurs who certainly don’t want to do that themselves have hired the services of a collection agency so that they at least don’t have to deal with the hassle themselves. It is also not an exaggeration to obtain information in advance about the creditworthiness of a company you would like to do business with.

Dividing paths

Sometimes a customer has difficulty paying for a while, due to one circumstance or another, and then you are good friends again. However, there are companies that make a sport of paying poorly. Remember that time is money. Also the time spent collecting receivables. Make the sum in a matter-of-fact way. When a customer structurally earns a lot less money in relation to other customers due to non-payment, but it does cause a lot of annoyance and effort, it is time to consider whether it is time to part ways. However, always indicate clearly and in a timely manner how things stand. It is not fair to get annoyed in silence and then suddenly cut off all ties with the customer after that same deafening silence. A defaulter also has the right to be informed in a timely and complete manner about the matters that may or may not be related to you.

Timidity and resistance

There are many entrepreneurs who are reluctant to confront a customer about lax or poor payment behavior. It is thought that this creates a disturbed relationship. However, there are plenty of arguments for intervening in a timely manner and taking concrete measures against the debtor. For example, Robert Blom says: The customer has already disrupted the relationship by not honoring the payment agreement. Statistics show that receivables that are too old are difficult to collect. A study has shown that the poorly paying customer can actually understand the supplier who initiates a collection procedure. Logical, because no one wants to be paid late, right? In short, as with everything in life, fear is a bad advisor.

Unpaid bills: an example of a payment process

  • The payment was not received for a week or a little longer. A copy of the invoice will be sent as a reminder, or if necessary a telephone call will be made to the company in question.
  • Payment was not made for ten to fourteen days. A reminder is sent. In principle, a reminder should follow for every ten to fourteen days that payment is not made.
  • Payment has not been made for a month. From this moment on, you are within your rights if you outsource the claim, for example to a collection agency. However, it is polite to announce this in advance and give the debtor one last chance to pay.