No matter what business you are in, eventually you’ll have a customer that won’t pay up. When it happens, the challenge begins: How do you collect the money you are owed without costing you a customer?
Jeffrey Berenholz, an attorney specializing in collections, recommends following the four P’s of debt collection: Politeness, patience and persistence and perceptiveness.
“Be polite, because you can get far it you talk to customers nicely,” says Berenholz. “If you hear a person is in financial trouble, it’s worth it to try to collect the money yourself. Give the person some time, because it will take a lot longer if you send it out to collections and you may lose that person as a customer.”
Be as patient as possible, because a distressed company may have a poor cash flow that is affecting its ability to pay on time.
“Be persistent in trying to work something out with the customer so you can get repeat business,” says Berenholz. “Set aside some of your time to work on collections each week and follow-up on past letters.”
Keep up the pressure, but also know when it’s time to move on.
“Be perceptive to know when the customer is just stalling for no good reason,” says Berenholz. “Business owners make lots of decisions on when to move forward and when to move back. They usually know when the wool is being pulled over their eyes.
The better you know your customers, the easier it will be to determine whether they just need more time or if it’s time to file a lawsuit.”
Getting to know the customer is easier when the fact-finding is done when the relationship starts. Begin with a credit check and an application so you have some information on-hand in case you need to file a lawsuit.
“The more information you have up-front when the relationship is good, the easier it will be if things turn sour,” says Berenholz. “When it gets to a point you can’t collect, and you have no time to follow it up anymore, then it’s time for a third-party to help.”
How to reach: Jeffrey Berenholz, (216) 514-9879
