If you have spent any time attempting to recover bad debt for your business, you are likely often frustrated. You may ask yourself, “Why don’t they just pay what they owe?”

We get your frustration. Debt is a way of life to most American families, for good or bad, with aggregate US household debt is reported to be 12.35 trillion in 2016.  Although most people want to pay what they owe, some cannot. Some can, but not right now. Still others will not.

Certainly being unable or unwilling is a top reason that people do not pay. That is why the debt industry is thriving and why you might eventually hire a debt collection agency to help you.

There are however, reasons why people do not pay that you can impact yourself:

1. “I don’t understand my bill” or “My bill is incorrect” Make sure your invoices or statements  are readable and clearly detail all charges and reflects all charges and credits.
2. “I did not receive a bill” – Tardy billing (or not billing at all) is one of the leading causes of non-payment. Bill promptly! For business debts, make sure you have the correct contact for the person who approves and pays invoices as it may not be the person who hires you.
3. “I cannot pay it all at once and you will not provide payment terms” – Some money is better than none. Set up payment plans that work for both you and your customers. Make sure to document any payment arrangements.
4. “I want to pay by credit card but you do not accept them.”- Did you miss the part about 12.35 trillion? If you are going to give customers credit, you have to make it easy for them to pay you. Consider credit, debit, ACH, pay pal, Apple Pay, or even an online payment portal.
5. “I did not know it was going to cost this much.” Do you confirm your price with customers in writing beforehand, or better yet, do you have a contract?

In our experience, customers are likely to pay the bills first that are important to them because they want the service or product again, or because the person/company relationship is important to them. If you do not have the leverage of knowing the customer will need you in the future, then you need to be creatively incentivize them. Offer discounts for prompt payment or give them a discount on future product or service.

So, be prompt, be accurate, be regular and make it easy. Your cash flow will thank you!