Your 3 options to get paid by ‘brickwalling’ customers
Last week one of our readers told us about a customer of theirs who has been “brickwalling” them, whereby “whatever route we are instructed to follow to reach the person responsible to pay, we reach a voicemail or email address from which we receive no reply”.
Unfortunately this is by no means an isolated incident and, as that same reader pointed out in the comments section of this article, it is often the larger customers who are the biggest culprits.
So just what can businesses do in this situation? We take a look at the options available.
Option 1: Keep trying
As frustrating as unanswered calls and emails can be when chasing a customer for an outstanding payment, there is a chance that they may have a genuine excuse. Whether your customer has a staff absence or a technical issue, there are reasons they may not have received or managed to reply to your communication.
Each instance should of course be assessed on its own merits as to whether you afford that customer the benefit of the doubt. If they have a long history of missing payment deadlines, they’re probably stalling again. But if that customer has always been punctual and you have a good relationship with them, perhaps there’s more to it than first appears. Instinct often has a big part to play here, too.
You also need to take your own circumstances into account. If your business is really going to struggle without their payment, then that may force you to accelerate sterner action in order to resolve the situation. If it’s a small invoice that isn’t fundamental to a positive cash flow, perhaps a bit more leeway can be allowed – just not too much, as you don’t want to end up consuming too much resource chasing a single customer.
Option 2: Threaten legal action
If you’re convinced the customer is deliberately avoiding your communication to delay payment, or you urgently require payment, the threat of legal action can sometimes be enough encouragement for them to end their silence and pay the invoice.
A letter before action, or ‘seven day letter’, is a letter sent to customers that signals your intent to commence legal proceedings in the event the invoice is still unpaid within a specified time period (usually seven days). No business wants to be taken to court if they can avoid it – a County Court Judgment stays on a business’s credit report for six years – and receiving this can shock them into putting your invoice to the top of the pile.
However, it’s important that this letter isn’t used as an idle threat. You need to be prepared to start legal proceedings if the invoice is still unpaid when that date passes, and the court process can be both lengthy and costly.
You also need to take into account the effect this will have on your future relationship with that customer. Taking the legal route is viewed as a hardline tactic, so while it might secure payment it could also spell the end of your relationship with that customer.
Option 3: Instruct an agency
Another way to encourage your customer to pay any overdue invoices is to employ a specialist debt collection agency.
One of the biggest advantages of this approach is that the name of a debt collection agency when they first contact your customer is often enough to convince them to pay the invoice, but if not there’s a lot more value a specialist can add.
Many debt collection agencies prefer an approach of mediation to secure payment, rather than going straight in with the threat of legal action. This allows them to speak to the customer and understand why payment hasn’t been received, explaining how non-payment is affecting you and the steps that you have available if it remains outstanding – for example, legal action.
Should their communication be ignored like yours was, a good agency can then use various trace and investigation tools in order to locate your customer and get through to the right contact, keeping you updated and discussing your options at each stage.
This softer approach can help to preserve your relationship with that customer, with pricing models typically on a success basis, whereby you only pay in proportion to what the agency recovers. The important thing is to discuss your options and preferences with an agency and ensure that their ethos matches yours.
And after that?
As with all your experiences with late paying customers, it’s important that you learn from them and adjust the way you work to prevent future invoices from following the same path.
For instance, do you require all new customers to complete an account opening form the first time they are provided your goods and services on credit? And if so, how often are they asked to review and update their details?
Account opening forms are an excellent way of capturing the contact information of those responsible for paying you – namely the person’s name, email address, telephone number and postal address. You can even ask for a back-up contact in the event that person can’t be reached. Here are 8 questions to ask your customers before offering credit terms.
Similarly, ensure that a process is defined for dealing with these sorts of instances in the future. Make sure your credit control team knows how long to continue trying to make contact before a debt collection agency is instructed or a letter before action is sent, and that your customers know what will happen in the event they fail to pay you within terms.
If this sounds all too familiar and your customers are avoiding your calls, contact our award-winning team to discover how we can assist. We can help with both pre-legal and legal collections to get you back the money you’re owed, depending on your preference and the specific circumstances. Call us today on 0800 9774848 or email firstname.lastname@example.org to find out more.