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Businesses of all sizes spend way too much time trying to collect on unpaid invoices. And while it’s true that all companies suffer when someone is delinquent on payments, small businesses suffer disproportionately so. A large corporation can absorb a few non-payments, but if you’re a small firm, several unpaid invoices can put you out of business.

Debt collection agencies work hard to collect what other businesses owe you, but they don’t always succeed in recovering your money. What’s more, they can be expensive.

There’s another way to reduce the number of unpaid invoices you’re dealing with. Read on to learn about our approach.

Make Nonpayments Public

Every business wants a good reputation. Its very success depends on it. In the area of B2B collection, you can take advantage of this fact and make it work for you.

Say that a business owes you money. You’ve tried and tried to collect from them, without success. Instead of continuing to pester them, sending emails, writing letters, and leaving phone messages that are ignored, try this: Tell an influential third party that this particular business has one or more overdue invoices. The third party can then share with the entire world the fact that the business is delinquent on payments; it accomplishes this by publishing nonpayment information online.

Here’s a summary of how this approach works:

  • You send a notice to your debtor, explaining that their unpaid invoices could impact their perceived image.
  • The notice includes details of what you plan to post online, which is simply the truth about nonpayments, should the overdue invoices remain unpaid.
  • If possible, give your debtor a grace period as well as a firm deadline.
  • If the debt is paid before the deadline, you don’t need to take further action.
  • If the debt is still unpaid past your deadline, you publicly post information about the company that owes you money.
  • Other companies can view this information, which can negatively impact their decision regarding whether or not to conduct business with your debtor.

A poor image is not good for business. With the approach we’ve just outlined, a business that owes you money will want to repay you as quickly as possible to avoid information about their unpaid invoices going public. This incentive alone is usually enough for them to make paying their overdue invoices a top priority.

Give Your Debtors A Deadline

For this system to truly work its best, you need to give your debtor a deadline. This will give them enough time to redistribute funds internally, as needed, to pay you what they owe your business. In turn, it brings you the best chance of collecting the full amount as quickly and efficiently as possible, which helps your bottom line.

You can choose to publish the information immediately without giving your debtor a grace period, but they’ll likely be more willing to pay what they owe to keep the information from going public in the first place.

Once it is public, one of several things can happen. The other company may choose to pay you right away in order to improve their reputation as quickly as possible. However, they may feel backed against a wall, with no time to make amends. In this case, they may delay payment to you even longer, perhaps out of spite!

The moral of the story is, always try to work with a business that owes you money. Provide fair warning. Once the deadline has come and gone, it’s all on them. At that point, they are solely responsible for redeeming themselves and improving their reputation in the business world.

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Foster A Change

This approach has another advantage: It retrains companies to do business with you in a more responsible way that’s fairer to you.

In other words, by creating a real, visible penalty that can tarnish your debtor’s reputation, you’re retraining the owners and managers of that business to do things differently. This method teaches them to make paying their B2B bills a priority. If they don’t, there will be consequences. This alone often has the positive effect of other businesses doing everything in their power to pay you first.

Learn More About Paysco

If you think this method can help you collect payments that other companies owe you, contact Paysco. We’ve implemented such a system, and what’s more, we assign scores to the companies we report on. Unpaid invoices translate to low scores; these scores can improve once the business fulfills its duty and pays what it owes you.

We’ve found that going public, assigning scores, tracking payments, and posting updates online is a great way to provide small businesses with effective, affordable commercial collection services. This system applies the pressure that’s needed to get nonpayers to pay up.

Learn more about how this approach can benefit your business by contacting us. We’ll be happy to answer your questions and show how this system can benefit you. Reach out to Paysco today!