I am often asked by clients how much time is the right amount of time to wait for a customer to pay a bill. How long you wait depends on so many factors, among them: your contract terms, your ability and willingness to wait customers out, and whether or not you wish to continue doing business with delinquent customers.

Bad debt recovery can be tricky, and while there is no “one size fits all”  guide you as to how long to wait, we can definitely tell you that doing nothing or waiting too long can cost you. Here are some things to consider:

1. Separate slow paying customers who do regular business with you from non-paying customers who ignore you or refuse to pay. There are techniques you can use with slow paying customers such as discounts for prompt payment and automatic credit card debits that can help keep those customers current. You should always document your payment plans with all customers. 
2. Customers who ignore your bills and phone calls or who dispute your bill can also be handled with in-house debt collection up to a point. We recommend collection letters at 30 and 60 days,and a final notice at 90 days. However, only you can set your tolerance level and decide the timing that is right for you. If someone still ignore you or refuses to pay after 90 days, call in the collection agency. If someone responds to your in-house efforts, give them an opportunity not to be sent to collections, but hold them to their promise and do not hesitate to send them to collections if they default.
3. Do not make the mistake of avoiding over 90-day balances to a collection agency solely based on the costs of collection agency fees. Your collection agency will not be “taking part of your money”, they will be recovering money that is lost to you.

Waiting too long to recover bad debt is like gambling. You risk not being paid at all if a customer moves or goes out of business.You risk losing the opportunity to secure your debt to an asset. Also, we have seen that when our customers wait a year or more to recover bad debt, we often hear additional push back from the debtors, as if the debtor is saying, “What took them so long?” 

Do you want help with collection letters? We have it. Download our free guide to writing collection letters that get results.