Types of charges: learn how to charge and avoid defaults
Do you know what types of charges are available to avoid default in your business? Not charging customers appropriately can negatively impact your company’s cash flow, causing disorganization of your finances . But the good news is that there are some strategies to avoid this scenario.
In today’s post, we will present some types of billing to implement in your company, show the importance of efficient billing management and how you can avoid default and charge your customers. Want to know more about the subject? So, come read!
What are the types of charges?
The types of charges range from sending an email to taking legal action to resolve the situation. Let’s see some of them below.
Preventive billing
Initially, it is recommended to send an email, a WhatsApp message or an SMS to notify the customer that the payment deadline is expiring. Send this communication a few days in advance so the customer can prepare and set aside the investment necessary for payment.
Friendly billing
If the customer doesn’t return with an explanation and doesn’t make the payment, you can make a call to their cell phone to charge them in a kind and cordial manner. The idea is to remind this consumer that there is a pending payment in their name. This way, you can find a solution to solve the problem.
Other types of charges that can be used after the payment deadline has expired involve sending an SMS with the reminder and payment link and sending a letter to the customer’s home with the invoice.
Friendly collection, also known as extrajudicial, is done in order to try to resolve the default without involving the judicial system in the process. The objective is to find a solution that meets the needs of both parties. In this case, you can propose negotiating values, terms and payment conditions for the customer.
Judicial collection and notary protest
The last and most extreme type of charge (and which should be your last alternative) is to go to court due to default or file a notary protest, registering an unpaid debt. When the case ends up in court, the judge sets a deadline for the missed payment. But you should try other options before filing this appeal.
The idea is to reach a common denominator with the customer. Try to understand the scenario, perhaps the consumer is having a specific problem and, therefore, was unable to make the payment.
Try to talk transparently with the person to understand what happened. This strategy strengthens the relationship with the customer, means you don’t lose the sale and also helps to build consumer loyalty.
How important is it to have good collections management?
We have separated 3 advantages of having good collections management in your companies. Check out!
Do not compromise cash flow
One of the main objectives of collections management is to avoid default. After all, default can compromise your cash flow.
When you control this flow and have a payment plan , you expect to receive a certain amount of money. If this doesn’t happen, and you receive much less than expected, this can disrupt the entire financial management of the business.
Therefore, managing collections helps to avoid this situation, because you act before things happen. In other words, if you adopt the strategy of sending a notification to customers a few days before the payment deadline expires, this already tends to reduce defaults.
With other measures, there are even more chances of not suffering from non-payment and, therefore, not compromising cash flow.
Greater control
Having efficient collections management means having more control over your finances and, consequently, better financial health for your business.
This management involves having all billing information written down, whether in a spreadsheet or in a specialized system. The idea is that you can consult this information when necessary, evaluate the scenarios and draw up strategies based on data to reduce defaults.
Furthermore, by having collections management, you can improve your relationship with the customer, which has a positive impact on sales and business profitability.
Avoid debt
Just as not having collections management compromises your cash flow, default can cause you to get into debt because you don’t have enough money in cash at the end of the month.
Aligning charges with your customers is essential for your business’s finances and you cannot neglect this point. But how to make collections and avoid default? That’s what we’re going to see next, check it out!
How to make collections and avoid default?
Come see 3 tips to stop suffering from default and adopt the types of charges!
Know the customer’s history
Knowing the customer’s history is important to offer alternatives in case of default. If payment is not made by a customer who has purchased from your company for a long time, this can be negotiated.
You should take this aspect into consideration instead of threatening the relationship with this customer with a sudden and aggressive collection stance.
Know how to negotiate
Knowing how to negotiate brings benefits not only to your company, but to your customers as well. This is because the negotiation seeks a positive scenario for both parties. You must show openness to find alternatives and arrive at an advantageous situation for the business and the customer.
Furthermore, during this time, you may need to negotiate with your suppliers until you receive payments from consumers. In this case, having negotiation skills is also important.
Offer special agreements and conditions
Special agreements and conditions are the best alternatives to resolve defaults and maintain relationships with customers. It is important that you always remain kind to consumers and offer them quality service.
In this case, negotiation skills are also necessary, as you propose alternatives to customers. Ideally, proposals should be personalized according to each case to increase the chances of closing a good deal.
Now, just define which strategy you will adopt to avoid default in your company and strengthen the relationship with your consumers.
