Collecting Delinquent Accounts When Customers Refuse to Pay
Collecting Delinquent Accounts
In a recent article, we pointed out three common reasons customers fail to pay delinquent accounts. In the last two articles, we discussed tips for collecting accounts when a customer faces a hardship and when a customer is dissatisfied with your products or services. The final most common reason customers fail to pay their accounts is because they do not want to. In this article, we will discuss some of your options as a creditor for dealing with these customers, which we refer to as High Risk.
High Risk customers are not always easy to identify because they prefer to hide among the hardship cases and dissatisfied customers. Identifying High Risk customers is often a process of elimination, but once the hardship and dissatisfied clients are identified, the remainder will be the High Risk cases, with few exceptions, and will most likely represent the bulk of your delinquent accounts.
The most cost-effective and obvious way to deal with a High Risk non-paying customer is to avoid extending credit to him in the first place. That may mean updating your business’s credit risk assessment and screening procedures to better identify credit-worthy customers.
The next best approach is to move the delinquent account through the collections process deliberately and persistently, ensuring each customer contact complies with all applicable debt collection practice regulations. (Remember, this type of customer is looking for any way to avoid paying the debt.)
One way to insulate your company and to ensure compliance with applicable rules is to outsource the High Risk accounts to a professional debt collection law firm. Outsourcing the collection process is the best way to protect your company from an aggressive High Risk customer.