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May 1, 201301:36 PMOpen for Business

with Jody Glynn Patrick

Dealing with late-paying customers and (why not?) business bloggers

(page 1 of 2)

Actually, I have two topics intertwined this week. First of all, IB accepts and publishes blogs and “open mic” pieces. I write two weekly IB blogs and also blog for clients such as TDS that have a high-end management audience segmented out for executive-level business communications. Before writing about any business subject, particularly for a client company, I research what other online bloggers have written. Then I have two options: either credit their advice as a source or expert link for my business reader, or make my own advice more practical and pointed, oftentimes turning to my own contact list of subject experts, etc.

What constantly amazes me when reading business (versus personal) blogs is the lack of practical advice put forward. In my opinion, too many business advice bloggers tend to wax (a) very philosophical, (b) very tangential, or (c) very academic.

As an example, in preparing a blog for you today on the topic of collecting past-due accounts receivables, I just read an article posted by a director of community relations for a receivables management company. In that blog, provocatively titled “How to Deal With Deadbeat Customers,” the author offers bulleted advice to 1) factor the invoice (sell the invoice at a discount), 2) file a lien (common practice in construction trades), 3) call a lawyer to write a scary collection letter (hint – think through the cost-benefit part of that equation first!), 4) hire a collection agency, and/or 5) write it off. Debts older than six months, the author asserts, are usually uncollectable.

Admittedly, those are all interesting options, but my advice is tempered by the desire to actually keep said customer, if possible. Not once did the writer suggest talking to the customer. She did not even qualify her advice by saying “after all efforts to collect from the customer have failed” but instead says that there are always going to be “some customers that won’t pay on time” and that these are the five ways to deal with “late-paying customers.”

IB has an incredibly high collection rate. We do not write off debt as a fifth, sixth, or even seventh option. We have seen too many companies experience cash-flow issues of their own because of late or write-off receivables from customers. We can’t afford to play the role of bank lender or credit agency and, at the same time, maintain the financial health of our company. But we do understand cash-flow valleys and peaks, and so we do allow a limited dollar amount to be “staged” for ongoing payments from repeat customers who demonstrate the ability to pay the balance on a schedule that meets our approval.

We treat customers the way we appreciate being treated. Our overall collection approach is to establish clear and respectful communication between both parties, and so we: 1) clearly state on every contract when payment is due, and 2) for invoices that are now between 30 and 45 days late, we connect directly with a top company executive (versus the bookkeeper) at least every week with the expectation of collecting the balance or establishing a date-specific payment schedule for the remaining balance. (Continued)

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May 2, 2013 02:37 pm
 Posted by  Anonymous

Very good and practical piece- I would also add especailly if you are a smaller business- keep track of what is happening to your clients. I did a major sale for a client a few weeks ago, he owes me money and we were going to connect when I was in his town but didn't - the reason his living space is flooded found it out from his facebook page. Instead of bugging him for my money I am letting him take a few weeks to get his life back together- in fact sent him an email instead saying if there was anyway I could help let me know. Under an automstic billing system he would have gotten a second notice by now adding to his stress and not adding much to our relationship. I will follow up in a few weeks - he has insurance and there wil leb no problem.
I am amazed though how many places I deal with- even small places allow robot systems to do their customer relations- had a bill I thought I had paid (actually had paid- turned out I had bought two tests at the same price the invoices were not clear about that- I paid for one and thought I had covered everything) It was months (and mulitple letters all with the same not very useful invoice) before it was straightened out- somethign a simple email to me would have solved quickly.
Having people use your internal data to do good business as opposed to having the data run itself is the first stage to making it work.

May 2, 2013 04:09 pm
 Posted by  Anonymous

Great advice Jody. I recently guest wrote an article for Industrial Distribution about this topic ( It is written for distributors but the advice works for virtually any B2B industry. I tried to avoid all of the traditional advice bullet points and focus mainly on using your receivables process not only to get paid on time but also to improve customer relations. It blows my mind that business leaders do not look at A/R as the key process it is. It deals with customer interactions and getting paid, really it should be one of the most important areas but is often the most overlooked.

Jun 14, 2013 11:42 am
 Posted by  Anonymous

Hi Jody!

I'm actually the author of said article. I agree with everything you said, but I also must add it is important if you are going to write an article to do all your research.

I wrote a series of articles for SCORE. This was the final one, and was meant to address those customers you had had unsuccessful conversations with and are "giving up on". The article prior to this addressed everything you wrote here and was all about talking to the customer. Definitely something you should have researched.

As well, I do have real world experience, in fact I work in consulting for receivables management and breathe this stuff inside and out. It's great that you don't write off debt, others are not as fortunate and need it off their books. Research actually backs my advice. Invoices over 6 months old are usually collected only about 40% of the time. Attorney letters to clients increases the collection rate by 70%. Etc. etc.

I actually kind of love this piece, despite being one of the subjects. I do agree that a lot of business bloggers don't know what they are talking about. Or, they offer really "general" advice that you waste your time reading and afterwards realize you didn't learn a single thing. But I'm not a business blogger. I'm a consultant sharing what I've learned after working with my customers. If you are going to write articles like this in the future (which you should), I'd just look a little further into the subject and the article. If you'd like to connect offline, you can email me at

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