What you need to know to protect yourself as a business owner
You might not have heard of a high-risk client before, but the sound of it isn’t very good. They are the leading players when it comes to commercial debt collection, in that their refusal to pay can lead to legal action. We’ll define what we mean by a delinquent, high-risk, non-paying client below. You’ll want to avoid them at all costs, and we have seven key strategies to help. If you’re doing something in business that involves legalities, then it’s a great idea to get your preferred Melbourne business lawyers involved for peace of mind. Are you wondering ‘what is commercial debt collection?’
1 – What is a high-risk client?
A delinquent, high-risk, non-paying client ignores your pleas for them to pay you for your goods and services already received. They might be in financial trouble and have too much debt to pay everything off. There might not be enough money to take care of everything, including your invoices. Some high-risk clients are mild-mannered enough, others are hostile, and others don’t return your calls. A high-risk client transgresses your terms of service, either out of necessity (they don’t have the money to pay you) or out of wilfulness (they don’t want to pay you). Either way, it’s not a position you want to be in too often. Read on to learn how to avoid high-risk clients in business in the future. You may wish to engage Melbourne business lawyers to help you conduct commercial debt collection. If you have a high-risk client, you may want to learn from our article ‘What is the process of debt recovery?’
2 – Find your clients within your network
The thing about having a business network is that it is an excellent source of referrals and a vetting device. If a person values being a part of your network, they will not send you a potential dud client. If they are a friend of a friend, a colleague of a colleague, then you have much more chance of any business interaction going well. At P&B Law, our Melbourne business lawyers often find new clients from our shared networks and previous customers. We rarely need commercial debt collection because we pick our clients well.
3 – Do a background check on new clients
Yes, you could blindly trust anyone who comes in your door, but that might get you into some trouble. The intelligent thing to do is your due diligence, which is to run a background check on any new clients you are thinking of taking on. It will save you a lot of grief, time, and money. Our Melbourne business lawyers can help you with this and with any part of the process of commercial debt collection.
4 – Check their price sensitivity
It’s amazing how often a client will tell you who they are straight off the bat without any prompting in business. What you need to look for in this instance is price sensitivity. If you share your prices with the new client, and they gasp or say, ‘that’s too expensive,’ or ‘why do you charge that much?’ that’s a good clue that they are not part of your intended clientele. Let them find someone cheaper so you can focus on the customers who value your work. Avoid the kinds of clients who are likely to get into the situation of commercial debt collection.
5 – Be clear and firm on your terms
You always need to communicate the terms and conditions associated with your products or services, including details like acceptable payment terms and methods. If you are fuzzy on your own rules, how is anyone else meant to follow them? Be prepared to state them in print, over email clearly, and in person, well before any commercial debt collection process. Make sure you sound confident when you talk about your terms and conditions, so you are taken seriously. Your Melbourne business lawyers can help you draft up any necessary paperwork.
6 – Enforce your terms and conditions
If you have transparently communicated your terms and conditions to someone, and they still disregard your boundaries, then it’s time to enforce them. You might want to contact some experienced Melbourne business lawyers to add further gravitas to your request. Sometimes just the sight of an official letterhead coming from a lawyer will help speed up repayments. If not, then you will need to proceed with commercial debt collection.
7 – Enjoy good karma
They say that “what goes around comes around”. Are you hiring one of the top Melbourne business lawyers to chase non-paying clients, but are you a non-paying client yourself concerning other businesses? Is someone chasing you for commercial debt collection? If that is so, it’s time you walked your talk and paid back any debts owed. Ignoring payment terms creates stress, but it also gives your business a bad reputation. So ensure that you treat others how you want to be treated in business, and enjoy your good karma.
Want to learn more about commercial debt collection? Read our article, 5 popular reasons why businesses choose not to outsource their commercial debt collections.
Trust P&B Law to help you deal with non-paying clients promptly
If you’ve already met some non-paying clients and they are hard to pin down, perhaps you need experienced Melbourne business lawyers to help you make your point. There’s nothing like a lawyer’s correspondence to show people that you’re serious. Get your money back by contacting us today.