Customer communication is key to turn those unpaid invoices into cash

If you’re experiencing the unfortunate, but common situation where a customer is withholding payment for provided products/services, you might be considering whether or not you should sue them for the unpaid invoices. While getting the courts involved is sometimes the right solution, it’s not something that should be done lightly.

While you may choose not to do business with this customer in the future because of this issue, taking them to court may damage the relationship so any potential for that would likely be off the table. Beyond losing this customer for any future business, they may react even further by telling their peers not to work with you either, give you bad reviews online, etc. That may be extreme, but there are many companies out there who have experienced the wrath of a slighted customer.

Furthermore, it’s not cheap to go to court so you must also consider the potential ROI of a court case. So if you are on the fence about whether or not to call your attorney, take this one last step before picking up the phone:

Send a final demand for payment

How many times have you tried to get in contact with the customer about paying their unpaid invoices? If you’re ready to take them to court then you’ve (hopefully) not only send them letters and emails, but called them as well – multiple times. While you may be frustrated with the asking and the waiting, make sure you try one last time before getting the lawyers involved by sending a final demand letter.

How is this letter different than the other requests for payment you’ve already sent? Well your first letter would have been a friendly letter simply reminding the customer of a missed deadline. The second letter would have turned up the heat a bit, getting a tad more assertive without getting too aggressive. Your final letter will be a final chance for the customer to pay you or reach out to work out a payment plan, let them know that if they do not do so, attorneys will be contacted. Like all collection letters, there is a right and a wrong way to write this letter which need to take in to account  issues such as regulatory or legal wording which can differ between the various industries.

You’d be surprised at how effective a demand letter can be in finally getting the customer in question to pay you. When it comes to invoice collection, communication is essential from the very beginning. In fact, many companies find that if they work on their communication strategy, they have fewer instances where this final demand payment letter is necessary at all.

 If you still do not get a response to your final demand letter, it may be time to pursue legal action either in small claims court or, if the sum of money you are looking to collect is larger, in a civil trial court.

Learn more about Credit and Collections best practices here… and to download our free whitepaper

If you want more insight on managing disputes and invoice dispute resolution tactics please contact  Anytime Collect Israel for a free demo.

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