Credit Matters Blog

The Missing Payment - A Problem or an Opportunity?

Kim Radok 23 December 2013


In many business environments, a missed payment is deemed akin to a disaster and an indication the customer is on the verge of delinquency. We often see financial institutions and service utilities go overboard when a consumer misses a payment. As a result, unrealistic penalties and draconian actions are commenced against the consumer, which often in the long-term, back fire against the business initiating such reactions.

In the commercial environment, the situation is a little less clear. There are usually three broad responses,

1  The "Let's not stress, I am sure the payment will come soon" reaction. This response is satisfactory if the payment arrives in a day or so, from an otherwise good paying customer.

However, if nothing is done because the owner is afraid to contact his or her customer, then this is not a positive business response.

2  The business owner or manager over-acts and demands the payment is made now. This course of action may anger the customer and the business an otherwise good paying customer.

3  The accounts employee makes an enquiry as to whether there are any payment problems and the customer responds with the relevant information. In this case, the problem is resolved and the business relationship continues as normal and both parties benefit.

In my view, a missed payment is always a "sales" opportunity if managed properly, particularly in the SME to mid-sized business. Why you might ask.

Every contact with your customer is an opportunity to talk with and find out something more about YOUR customer. In each contact, if made properly, you find out any number of positive aspects about your business relationship. The missed payment may be the perfect excuse you need to make contact and talk with your customer. 

Here are a number of important operational factors I have discovered whilst making contact for the missing payment.

# The customer has new invoicing / billing instructions.

# There has been a change in accounts payable personnel and or procedures.

# A new CFO or accountant has joined with new procedures which will make getting paid either better or more difficult, depending on their value they see in protecting their business's financial reputation.

# The customer's supplier (your competitor) has gone out of business and they are looking for new suppliers.

# A major customer has become Insolvent which threatens their cashflow, and by default, your cashflow.

# You find out that your customer is looking for more business from your business. (I kid you not! It is amazing how many times as the credit/accounts person I have been approached by the customer about the possibilities of doing more business).

# The reasons why your customer no longer buys as much, e.g. it mainly occurs because of invoicing errors, broken sales promises, or a lack of communication between your sales people and accounts people, etc.

I could provide a number of other benefits from my experience which aren't limited to the above.

Making contact with your customers also shows you care about how the business relationship is going. As mentioned, with the right approach, the customer does not feel threatened by a gentle enquiry about the missing payment. I cannot tell of all the worthwhile benefits which have come about because I made a telephone call to a customer about the missing payment.

If you have taken the other path of worry,  bullying and panic in the past about contacting the customer for the missing payment, why not try a different approach in 2014? Having your accounts employees, or even yourself, try a different approach and ethos to the missing payment, will I believe, achieve better results.

May you be paid today rather than tomorrow

Kim Radok