Credit customers – those select customers you trust to pay you over time – can be a boost to your business. Offering terms to customers will allow you to remain competitive and help you grow.
Offering credit involves a great deal of trust with your customers, and requires that you communicate your terms clearly from the onset.
All sorts of businesses offer all sorts of credit. A medical office that accepts insurance offers credit while the claim is being processed. The doctor trusts that insurance is valid, and that patients will pay any costs not covered by insurance. A manufacturer or service provider trusts that customers will abide by agreed credit terms by paying on time.
The best way to make sure customers stay on track is to memorialize credit terms in writing, in a customer contract.
What happens when you do not put credit terms in writing?
While oral contracts are recognized as valid in most states, they are also open to interpretation. In the event of a dispute, chances are you and your customer will remember things differently.
In The Princess Bride, one of the characters uses the word, “inconceivable” about things that are anything but. In response, another character tells him, “You keep using that word. I don’t think it means what you think it means.”
In fact, every day we speak with people who believe they do not believe they owe anything – despite evidence to the contrary – due to something they were told, and what they believe they heard.
You say, “Don’t worry about the bill”. They hear, “You do not have to pay anything.”
We recently attempted to collect a debt from a gentleman who had suffered a tragedy in his family. Our client, a doctor had reached out to convey his sympathy, and told the patient, “Don’t worry about the bill at this time. Take care of yourself and your family, and we can take care of the bill later”. The patient only heard the first part.
You say,”You’re all set”. They hear, “You do not have to pay anything”.
To be fair, “you’re all set” really might mean that no money is owed. However, if you are a medical office and tell a patient she is all set, you likely mean to say that you have the information you need to bill the insurance. If you have set up a recurring billing plan, and want to advise the customer that you have all the information you need, you might tell them they are all set, but only in the context of being able to process the payment.
Words matter. Communication is key. If, in the above instances, the creditors had taken time to have the customer sign a contract confirming their financial responsibility, what they really meant to say would not be in question.
Get it in writing!