A Guide To Effectively Managing Delinquent Accounts

Unpaid invoice payments are very annoying since they show customer reluctance to pay and are usually the first sign of a delinquent debtor. Unfortunately, delinquent customers are a strain on a business and can threaten your financial solvency.

Delinquent clients can reduce your cash flow and bring several inconveniences for running your business. That’s why it’s important to take the right measures to avoid such clients in the first place or at the very least, learn delinquent account handling them effectively. Nelson, Cooper & Ortiz, LLC is a reputable Houston debt collection and debt recovery service offering agency with a reputation for swift debt recovery and we can help you with the same. 

Causes of A Delinquent Account

A lot of factors can give rise to delinquent account causes. Once you start understanding the factors, it can effectively help you to strategize the preventive measures optimally-

• Financial Difficulties/ Hardships

Financial difficulties stand on top of the reasons behind the causes of delinquency. Adversities like loss of a job, sudden medical emergencies, etc., can make it really difficult for people to maintain their payment obligations. Hence, such catastrophic events pose great challenges for individuals for which your payments might get delayed, resulting in delinquency.

• Excessive Spending

Excessive spending or overspending is another very common reason behind causing delinquency. This happens when a person, or a business, takes on more debts than their repayment capacity. Some of the usual causes of overspending occur via credit card debts, loans, or other financial obligations that exceed the available resources of the individuals or businesses.

• Tiffs and Disputes

Tiffs or disputes with customers or businesses regarding the billing amounts, or services can also result in delinquency. At times, customers or businesses may raise a dispute relating to the charges, and refuse to pay up until and unless the issue is resolved. This results in overdue accounts, which ultimately leads to delinquency. Disputes like these can come up from issues like misunderstandings, or dissatisfaction from the products or services received by the business or the customer.

Here’s how you can avoid and handle non-paying clients:

1. Offer Incentives and Charge A Late Fee

The best way to avoid late payments is to provide incentives and punish non-payers. For instance, you can provide minor discounts of less than 1% for early payments. While that’s an enticing carrot, you can make this a two-step process by charging late fees.

This acts like a double-edged sword that allows you to quickly identify clients who are more likely to be non-payers in the future. According to professional debt collection services, this strategy works wonders for their clients.     

2. Offer Convenient Modes of Payment

You may have a preferred way of conducting business. Businesses love to operate with cash. However, when you offer more convenient options for delinquent accounts handling, you increase the chances of successful payments from your clients. As a successful business debt collection agency, we offer payment in card, cash, and all kinds of digital options for the convenience of debtors.

Apart from providing different payment modes, you can also offer payment options in easy installments. Businesses that are struggling with cash flow have an easier time making payments with EMIs. As a debt collection agency, we often witness increased recovery rates with the EMI option.

3. Hire Professionals

When you fail to collect payments from stubborn and delinquent debtors, it’s best to hire professionals for the job. Professionals have an arsenal of tools and a dedicated team that helps them overcome challenges and swiftly recover their money. For instance, we have artificial intelligence and machine learning tools that sort out debtors in different profiles and help us target them efficiently. This helps us choose a soft approach to recover unpaid debts without harming our business relationships.  

4. Schedule Reminders Before Invoices are Due

It’s not every time that businesses or individuals let their accounts become overdue. Sometimes, financial departments are flooded with supplier invoice requests, which results in payment invoices getting overlooked. If you happen to schedule a reminder before the invoices are due, it’s most likely to catch the eyes of the person/ the business, which would encourage them to pay off their debts on time.

5. Implement a Customer Dispute Resolution System

As you know, disagreements lead to disputes and are one of the major reasons behind overdue payments. So, choose to set up a dispute resolution system that effectively addresses to customer complaints. This system must have designated people appointed for dispute settlements, and must also have specified ways to communicate, record, and track all dispute-related activities. This can result in a seamless dispute settlement.

Have clients who refuse to pay their debt despite your best efforts? Choose Nelson, Cooper & Ortiz, LLC as your commercial collection agency in Houston to increase your cash flow as quickly as possible. Connect with us at info@prelitigation.com or click on this link https://prelitigation.com/request-a-quote to request a quote.