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A Guide to Collecting Payments from Clients

Many people have fallen upon hard times due to the COVID-19 pandemic. Widespread layoffs, along with the impact this crisis has on economic activity have made it difficult for many to write off debts and make timely payments. Sure enough, government policies have instructed businesses and property owners to forego their payment collections in a bid to ease up the financial burden of the most vulnerable sectors. However, this was met with widespread criticism from small business owners who are also reeling from the effects of this pandemic.

In these uncertain times, business owners will need to show compassion and wait until their clients get back on their feet.  Sadly, there are those who take advantage of this need for compassion. There are cases of people who hide the fact that they can pay their dues on time and insist they are going through a difficult time like anyone else. As a business owner, you also need to make a living, and the way to do that is to collect money from clients who have it. It gets tricky from there, but there are a few methods that can help you go about it:

1. Explain before asking

In most cases, we tend to ask clients to tender their payments immediately before legal action is taken. Considering the current situation, it is best to keep your cool and let your clients know why you are asking them to pay. If your business took a big blow to the bottom line during the pandemic, let your clients know that you also have bills and salaries to pay.

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Whether it’s through phone or email, requesting payment from clients is a minefield. At the very least, you wouldn’t want to get on your clients’ bad side by sending them a forceful email or subtle threats of legal action. There is always a better way. You can start by providing them the details about their unpaid invoices and providing them with options on how they can write off their balances.

If they still could not settle the amount they owe, it’s still best to keep your head cool and avoid any action that could escalate the situation. For this reason, it’s essential to have a team of experienced customer care specialists who are skilled in debt collection and conflict resolution.

2. Don’t surprise your clients

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Asking your clients to pay immediately comes off as unprofessional. For this reason, you might as well send a notification weeks in advance. By giving your clients a heads up, you also open yourself up to negotiation and give your clients enough time to consider their options. It is also important to be clear and considerate so your clients won’t respond in a negative manner.

It’s not always a good idea to demand payment when your clients aren’t expecting it. As much as possible, you need to keep them informed about their due dates and make yourself available in case they want to defer making any payment for the recent billing cycle. With that being said, you might want to use a customer relationship management system that sends out automated reminders. Make sure to pace your notifications properly. You wouldn’t want to spam your clients’ inboxes with reminders, as this can cast your brand under bad light. It’s always best to allow your clients to set their expectations early on so they couldn’t be caught off guard when their bills are due.

3. Provide a billing schedule

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If your clients are way behind schedule and have accumulated a large bill over time, you can always reach out to them and come up with a manageable payment schedule. With this method, you provide your clients with a flexible timeframe to settle their accounts. Seeing as many people are currently not able to make payments on time, modifying your payment terms helps you maintain close relationships with your clients and make sure that everyone is satisfied.

While you might not get the full amount they owe, they may be able to pay back the amount owed in smaller increments without too much financial hardship on their part. For this reason, try to reach out to your clients through your customer service reps and see how you can help them with lessening the burden.

Then again, not everyone is going to be honest about their situation, and some could take advantage of the safety nets you provide for them and dance around new deadlines. In this case, you might need to dig a little deeper to find out if certain clients are having a hard time as they say they are.

4. Learn how hard up they really are

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Still, there will be cases when clients refuse to disclose their current financial health in a bid to forego any payments. There are ways for you to detect such acts as this. For instance, you can conduct an asset investigation on an individual to know their actual financial standing. For this, you should opt for a company that lets you build an asset search database.

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However, you may run into legal issues or complications when you are conducting an asset search and other methods of investigation. Privacy laws can get in the way of the process and unless you work with an experienced due diligence company, it will be difficult for you to determine the actual financial situation of your clients.  Make sure you review any relevant laws and contact certified investigators. In addition, avoid working with companies that operate under the radar. You wouldn’t want to get tangled in a more complicated legal mess, so be sure to scrutinize the company that will be helping you scrutinize your clients.

Collecting payments from clients can be challenging, but using the right approaches can help small businesses stay afloat. After all, everyone has been affected by the pandemic, and we all need to do what we can to get by.


Ricardo is a freelance writer specialized in politics. He is with foreignpolicyi.org from the beginning and helps it grow. Email: richardorland4[at]gmai.com