Helping customers pay on time: our top 3 approaches
Over 50,000 SME businesses go bust each year due to problems caused by late payments. Therefore, businesses that rely on regular payments from customers to stay afloat must ensure that those payments arrive on time.
To help companies prevent late payments from impacting them negatively, we’ll look at a few different methods they can use to ensure customers pay on time. These approaches will improve customer relationships, create a better customer experience and ensure businesses get paid on time.
1. Prioritise good relationships with customers
79% of people say they won’t use a brand’s products or services unless the company demonstrates that it cares about its customers. Consequently, maintaining trust and preventing damage to customer relationships in the long-term is a smart goal for any business. There are a few different ways to achieve good customer relationships:
- Be calm but assertive: Contact teams should be assertive and not take excuses, but should also avoid confrontation and approach all customer interactions calmly. Combining these two features is a vital part of the training process.
- Consider the company’s reputation: The organisation’s brand is on the line during every customer interaction. Being seen as “firm but fair” is a good image to aim for, which can be achieved by focusing equally on getting customers to pay on time and supporting their needs.
- Prioritise understanding: Positive, compassionate experiences today help incentivise timely payments tomorrow. Consider emphasising to your customer service teams that customers shouldn’t feel taken advantage of or alienated. Empathy and understanding are particularly important during interactions with vulnerable customers.
How can you maintain good customer relationships when there are late payments or unpaid invoices?
Regular, persistent communication is vital in maintaining good customer relationships. But when late payments are an issue, it’s important to keep that communication focused on support options.
Specifically, creating action plans and payment schedules is a good idea. These strategies allow a business to demonstrate that it’s invested in alleviating a customers’ financial stress, rather than just getting paid on time. If possible, companies could consider incentivising early payments with reductions and discounts.
Balancing good relationships with debt collection helps keep customers engaged, which is vital for ensuring timely payments. If a customer does not have a good relationship with a company, they are likely to disengage when they miss payments, which will increase the likelihood of further missed payments.
2. Make any support options clear
If a business offers some form of support for customers in need — payment holidays, grants, or similar — it’s in the company’s best interest to make sure customers are aware of those options.
Water companies in England and Wales offered types of financial support during lockdown, but only 15% of their customers were aware of these options. Due to lack of awareness, both parties lost out. Some customers continued to struggle to pay bills, and the companies lost money to late payments.
Making it clear that support options are available improves customer loyalty and creates a better reputation for the brand. More importantly, it helps ensure regular payments which in turn create a consistent cash flow.
If a company is spending valuable time guiding customers towards the support options available to its more vulnerable customers, it’s essential that they are able to identify which customers can’t pay and which customers simply won’t pay. For more information on how to differentiate between types of customers, read our recent article on giving vulnerable customers the best experience.
In cases of repeated late payments, businesses may be better served by investigating why a specific customer pays late than repeating a generalised procedure over and over again. For those who can’t pay, support options are definitely the better choice. As we mentioned, grants or payment schedules can help enormously. Services like Sigma Connected’s ReachOut initiative are also great for re-engaging customers who find they are struggling to pay a bill.
3. Personalise your approach with data insights
Any company with a large customer base will have a wealth of data available. By analysing customer data, these companies can gain a great insight into customer behaviour. The higher the quality of the data, the more useful the insights will be.
When a business is seeking to help customers pay on time, it’s best to use concrete data to form collection strategies and customer contact approaches. For late payers or people unable to pay, collect an inventory of all customers who fit into that category. Find out as much relevant information as you can on these customers, such as:
- Online behaviours
- Shopping habits
- Purchasing habits
- How, when and why they interact with your company
- Communication channels they engage through most
Once a customer support team knows details about who makes late payments, it will be easier to understand the typical journeys they take. Data can help determine common themes across financial issues, as well as trends in behaviour among customers who fit a particular profile. Identifying trends helps businesses predict late payments before they happen, and be proactive rather than reactive.
Keep customers engaged with Sigma Connected
At Sigma Connected, we are experts at collections. By allowing our team to relieve you of the burden of debt collection, you’ll free up time for you to focus on your core business. Partnering with Sigma provides a bespoke customer contact solution, leading to higher customer retention and up to 30x return on investment in collection performance.
If you’re interested in any of our services or have any questions about what we can do for you, contact us below.