It’s always disappointing when one of your customers falls behind on their payment terms to you and sometimes you may need to arrange a detour, a secondary payment plan to repay money back to your company if they are falling behind. Making a payment arrangement that is both something that you and your customer can live with can sometimes be difficult. But don’t always take the first payment plan the offer. Sometimes your customers may take advantage of the situation costing you money and allowing things to drag on longer than is actually necessary.
Before agreeing to a payment plan that is outside the normal terms its important that you lay some ground rules. First let the customer know that this can only be a one time deal and that you are not in the business of financing their purchases with your company for longer than their original credit terms. Second make sure that your customer explains to you exactly how they got in this situation in the first place so that you can help make sure this doesn’t happen again. Third try to get a series of post dated checks or set up an automatic ACH draft so that there can be no issues with forgetting to mail a payment or someone not sending it in the mail, this one is key to completing a successful payment plan.
When setting up a repayment you should always work on trying to get customers on a weekly or biweekly payment plan, meaning that you are getting a payment from them every week or every two weeks and try not to extend the debt any longer than 90 days. By setting up your payment plan this way you are able to keep a closer eye on your customer and will know sooner rather than later if there is a problem as opposed to getting a monthly payment. By working with your customer to solve the issue, you can ensure a long-lasting relationship.
If they need more time, then urge them to seek outside funding through their bank or a third-party lender. If this isn’t an option and you want to still make the arrangement it’s good to get a Note in place with a Personal Guarantee and maybe even some sort of collateral attached to protect yourself in the long run. If you aren’t able to secure any of these and they still aren’t coming to the table it may be time to seek help from your collections agency.
