Every business that provides a product or service to clients has faced the situation where a client hasn’t paid on time. This can be very challenging as when unpaid invoices stack up it can seriously affect your cash flow. The money needs to be paid, yet chasing the client for payment can feel awkward, uncomfortable and at odds with the rest of your relationship.
Further escalating this issue is the fact that many businesses don’t have a good system in place for debt collection. The task ends up falling to the client manager or account manager to chase the payment which can be fraught with several issues:
Chasing payments is a distraction
One of the drawbacks of having client managers chase payments is that it diverts their attention from their core responsibilities. Client managers or account managers are essential for nurturing and maintaining client relationships, understanding their needs, and ensuring the delivery of top-notch service. When they are burdened with chasing payments, their focus shifts away from these critical tasks. In essence, client managers should be enhancing the client experience, not acting as debt collectors.
Clients can feel unvalued
Chasing clients for payments can send a negative message. It can make them feel like they are not a priority or that their relationship with your business is purely transactional. When they receive repeated reminders or demands for payment, it can create discomfort and erode trust. This can damage your brand image and diminish the perceived value of your services. Clients who feel hassled and uncomfortable due to payment-related interactions may start looking for alternative service providers. The last thing you want is to lose valuable clients because of issues related to payments.
Your team may avoid chasing payments
Because chasing payments can be uncomfortable and awkward, your client management team may put the task at the bottom of their to-do-list. They may worry that pressing for payment could damage the rapport they’ve built with clients over time. This can mean the task isn’t undertaken promptly, deepening your cash flow burden.
Chasing payments can build resentment
It’s important that client managers and account managers are able to put themselves in the shoes of the client and treat them with respect, care and empathy. When they are aware that a client hasn’t paid, or worse are made responsible for recovering that payment, it can sour their perception of the client and build resentment. This can be demotivating and subsequently impact service delivery.
So, what’s the alternative?
Instead of tasking your client managers or account managers with debt collection, an alternative approach is to keep debt collection separate from the client management process. A good option for this is to outsource it.
Here are some reasons why this approach can be more effective:
- Outsourcing chasing payments allows your client management team to focus exclusively on what they do best – building and nurturing client relationships. It ensures that their energy is dedicated solely to delivering exceptional service.
- Debt collection agencies are experts in their field. They have the knowledge and experience to handle payment disputes, negotiations, and collections professionally. By entrusting this responsibility to specialists, you improve the chances of recovering debts without damaging client relationships.
- Separating payment collection from client management ensures that clients are not subjected to uncomfortable interactions with your internal staff. It preserves the positive image of your organisation and maintains the client’s trust and satisfaction.
Ultimately, ensuring that late payments are followed up consistently and promptly will maximise your chances of speedier debt recovery. Outsourcing this function can ensure it remains a top priority without compromising your client relationships.
Looking for support in debt collection? We can help. Keeping Company’s PromptPay service can help with getting paid on time and recovering debts. Contact us today to find out more.
At Keeping Company, we’re not just accountants, we’re business people too. With our counsel, your business can reach its full potential.
We have a team of experts; Cloud Accountants, Business Advisors, Finance Specialists working together and ready to help, contact us today.
For all media enquires please contact Tracy Miller, CMO, Keeping Company 0414 898 452.
The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.