A Guide to Chasing Late and Overdue Debt

Chasing late and overdue payments can be a challenging but essential aspect of managing your finances and business operations. If you do not receive payment on time, this can have a knock on effect for your own business, so steps should be taken to avoid this. At Debt2Collect, we’ve put together a list of tips that work effectively when chasing late payments.

Steps to Chasing Payments

Send Friendly Reminders

Begin by sending polite and friendly reminders to the client or customer as soon as the payment becomes overdue. Sometimes, late payments can be a result of forgetfulness or oversight, and a gentle nudge can prompt them to make the payment. At this point, it is good practice to be understanding with customers over circumstances why payments haven’t happened on time.

Don't delay in following up on late payments. Reach out to the customer immediately to inquire about the status of the payment and if they are experiencing any issues. If they do respond explaining they are facing financial difficulties, it is possible you could offer flexible payment options or a payment plan to settle the debt.

Use Clear Payment Terms

Ensure that your invoices and payment terms are clear and easy to understand. Include the due date prominently on the invoice and specify any late payment penalties or interest charges.

With this, your company may benefit from regularly reviewing the current payment process. By reflecting on your invoicing and payment procedures, you can evaluate whether there are any aspects of your process that may contribute to late payments and make improvements accordingly.

Make Personal Contact

If emails or messages are not getting a response, consider making a personal phone call if you feel the time is right. Speaking directly with the customer can help build a stronger sense of urgency.

When sending any correspondence or speaking on the phone, it is important to be firm but professional. You should be a good representation of the company and not lose professionalism in the way you respond. While it's essential to maintain a professional tone, be firm in your communication about the late payment. Clearly state the consequences of continued non-payment, such as late fees or possible legal action.

Maintain Documentation

Throughout the process, keep detailed records of all communications, invoices, and payment agreements. This documentation can be helpful if you need to involve a third party or pursue legal action.

Send a Formal Letter

If the gentle reminders and phone calls don't yield results, send a formal letter to the customer, clearly stating the amount owed, the original payment terms, and any late fees or penalties incurred. At Debt2Collect, we offer online management of debt collection letters so that you can request overdue payments in a matter of minutes. Our letters have a 97% success rate in prompting a reaction from your customer to recover what is owed to you.

Late Payment Demand is usually the first letter to be sent, which is an assertive letter explaining that the customer has 14 days to make a payment. Following this, Letter Before Action is the final letter that is sent before any legal action is taken. If the customer continues to ignore all forms of communication, you may need to escalate the matter and consult with a lawyer about the next steps.

Remain Professional at All Times

Remember to always remain professional and courteous when you chase late payments, even if the situation is frustrating. Building and maintaining positive relationships with your customers is crucial for long-term business success, so you should take this into account in the manner with which you respond. However, you should also be prepared to take appropriate actions to protect your business' financial health when necessary.