The Silvertrac Extra: A Blog & Podcast for the Security Guard Industry

016: 4 Techniques for Collecting on Past Due Accounts

Jun 3, 2015 11:53:00 AM / by Johnny Page

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On today’s episode, we discuss the best techniques for collecting on past due accounts without losing clients. Collecting payment is always a touchy subject, and it’s a delicate balance between being firm enough to get paid and polite enough to avoid souring the relationship. This is an especially pressing issue for young companies in the security industry that don’t have well-established practices, customer relationships, or the cash to weather non-payment.

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Technique #1: Use A Personal Touch

Get to know whoever manages your invoices on the customer’s end, and do your best to develop a good personal relationship with that individual. That means giving them the benefit of the doubt when payment is late, and approaching the issue from a collaborative perspective rather than a confrontational one.

That means communicating clearly with them, finding out what’s the most convenient time to submit invoices, and firmly establishing what paperwork they need from you each month. Having these conversations increases the odds of future discussions being harmonious, and it reduces the potential excuses for non-payment.

Chris jokingly discussed times when he was tempted to try a bribe in order to get payment. In all seriousness, the occasional small gesture, such as a $10 gift card, as a thank you for them helping to create a productive relationship, can be a nice way to ensure prompt future payment.

Technique #2: Bring In An Additional Party

Despite your best attempts to create a positive relationship with the individual overseeing payment on the customer’s end, sometimes they will stonewall you and continue to make the same excuses. In these cases, it can be useful to loop an additional party, such as their boss or a regional manager.

“You don’t need to say much when you’re doing this,” I tell Chris, “just loop them in and say ‘Hey, I’m assuming that there was some oversight on this, I just need to make sure that we get this resolved before we have to either send this to collections or discontinue service.’"

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Technique #3: Use An Accounts Receivable Manager App

There are a number of apps out there today that help companies manage their receivables. Using these apps helps formalize the payment process and establish clear timeframes for payment from customers. They also reduce the possibility of paperwork getting misplaced or forgotten.

These apps also establish the processes if payment is late by automatically taking certain steps at 15 days past due, 30 days, etc. These apps can be a nice way of reminding your problem customers that, while you may be personable and friendly, this is still a professional relationship and they need to make payments on schedule. Remember technique #1, and still give them the personal touch, and let the app be the bad guy for you if it’s time to get tough.

Technique #4: Invoice Factoring

Essentially, invoice factoring means selling your accounts receivable to a third party. They pay you right away and take on the risk of nonpayment, but they also keep a cut of the payment. No one likes losing a percentage of their payment, but for big accounts invoice factoring can protect you from a major cash crisis. 

“When you’re in larger contracts, it leaves you no option unless you have someone that’s financially backing you up,” says Chris. “You take on a big contract, that’s a big payroll, and if you do get messed it can bankrupt you.”

For smaller clients, it invoice factoring can be problematic. Not only do they get a cut, but also the intermediary distances you from the customer, potentially weakening the relationship. Try the personal touch first.

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Johnny Page

Written by Johnny Page

Johnny is a Customer Success Enthusiast for Silvertrac Software who is passionate about business, technology, and (of course) our customers! Johnny spent time in the security industry in Business Development, Marketing, and Operations before joining the Silvertrac team.

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