What do you do when a customer won’t pay?

On Behalf of | Nov 21, 2022 | Collections

According to data from the U.S. Bureau of Labor Statistics, only 70 percent of businesses with employees will make it through their first two years of business. Regardless of how long a business has been around, maintaining a margin of profitability is always hard.

Unfortunately, any business is likely to come across a client that does not pay on time. Many fall into three categories, and it is prudent to develop different strategies to deal with each type.

Customers facing financial trouble

Forbes discusses ways to handle customers who do not pay on time. First, know which category a customer falls into if they do not pay.

First, there are those who cannot pay due to financial troubles. Next, there are those who make payments sporadically. Finally, there are those who will do whatever possible to get out of having to pay at all.

Customers who cannot pay due to financial reasons usually have a history of payment that is otherwise good. In these cases, it is beneficial to work with the customer and create a payment plan. This allows the customer to avoid penalties while maintaining a cash flow to the business. When they recover, they will likely be able to continue making payments as usual.

Customers making sporadic payments

Customers who pay sporadically may simply forget about the payments that they owe due to the hectic schedule of their life. These customers benefit from regular reminders about payments.

Customers who refuse to pay

As for customers who try to wiggle out of paying, it is possible to contact a collection agency or consider litigation after making attempts to discuss things with the individual one-on-one. Of course, try to avoid getting into business situations with these people in the first place wherever possible.


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