Requiring Payments on Delinquent Accounts

For new business owners, the first experiences with delinquent accounts may be distressing. Especially when it comes time to take action. Our company has instituted a series of policies, mostly implemented due to need, to address the situation. I am not longer as uncomfortable with handling this kind of situation, but I don’t think I’ll ever be completely easy with it.

  • It is not rude to create a policy of enforcement for delinquent accounts.
  • It is not unreasonable to require payment in advance (with reasonable assurances of performance on your part, such as satisfaction guarantees, refund policies, etc).
  • It is not mean to suspend a service when payment is not made.
  • It is not unfriendly to attempt to collect on a bounced check or to refuse further transactions from a customer who filed a chargeback on delivered goods.

Many of our company services operate on policies regarding website hosting services. We have policies that are well within the industry norms – in fact, they are fairly lenient compared with many hosting companies. Invoices are sent 15 days prior to the due date, reminders are sent, and if the account is 10 days late, it is suspended. Suspension does not delete the account – nothing is permanently lost. But it does make the site inaccessible by the public. Most companies will terminate (permanently delete) an account that is in excess of 30 days late. We do not. We keep it on the server for 6 months, then back it up and terminate the account.

We do this in an automated system – this actually takes some of the pressure off us. The system just automatically handles many things for us, it is “company policy”, and it just happens automatically, impartially, and completely predictably. We have clients for whom we will grant exceptions. We also have clients that we will not go out of our way for – these are clients who have already abused our good nature, or used up their chances.

It can be difficult at first to enforce policies like that. It can be shattering the first time you have to decide to send a bill to collections. It can be very hard when you have a client whom you like, and they refuse to pay what is owed. We find that if you have set policies, you can tell a client, “I’m sorry, this is our company policy.” If you can automate enforcement, it also makes it easier to cope with it, because that is just how your billing system works. Makes it a little less personal, which is a good thing in this case.

We protect ourselves by billing in advance, so we are rarely stung for large amounts of money. But many industries have a standard of billing after work is completed, and people who work in those industries will have to deal with unpaid bills more often.

Requiring payment is not unkind. It is a necessity of a successful business. There are times when it is appropriate to make an exception – but when you do, it is because you feel the desire to help someone whom you feel needs it due to factors beyond their control. It isn’t a daily thing, and it isn’t something you CAN do on all delinquent accounts. Business requires firmness with many things, because there are people who will abuse your good nature, and take advantage of your kindness. I dislike having to deal with that particular reality – that there are people who expect to go through life not paying their obligations, and expecting to get away with it.

In general, I’d rather err on the side of kindness. But I have clients whom I have turned the automated features in our billing manager BACK on, after having disabled them previously. A client to whom I granted an exception on a few occasions, who simply used up my good will. (After the third excuse, I see a pattern that isn’t going to stop, so I quit being an enabler.) Another client who almost NEVER pays until his sites go down, but who then promptly pays. People whom I generally like in other respects, but who will procrastinate or deliberately ignore their obligations unless I require them to by providing a consequence that they dislike.

It is never a pleasant thing to deal with. But it is a factor that each successful business person must face, and determine a way to state the requirements to the customer, and then follow through when payments for services or goods are not made as agreed.

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