4) Offer to Work Out a Payment Plan
Commonly used by collection agencies, the payment plan is probably the most customer-friendly approach you can use. It may create a bit of an accounting nightmare for you but with the proper software, you will be able to quickly balance the books. When applying a payment plan you should put some consideration into whether or not you will charge interest or levy a fee. You can gauge this by the number of payments required and the additional time it’s going to take you to manage the cash flow. You can even suggest taking the payments directly from a credit card each month.
5) Suggest an Alternative to Monetary Payment
The franchisor may not approve of this approach but it’s one that you should not disqualify. If you cannot pay your bill at a restaurant, you’ll end up washing dishes in the kitchen, right? Perhaps your late-paying customer can do some form of work “in lieu of” payment. Of course, this may not be possible for all business concepts but if your franchisor will allow it, there’s equal benefit for you in the end, and the customer agrees to it, why not try it out?
6) Avoid Aggression or Threat Tactics
If you are inexperienced in customer relations and don’t think you can experiment with any of the suggestions above, the last thing you don’t want to try is becoming aggressive or use the same type of threat tactics as collection agencies. Your goal is to avoid damaging customer relations, especially at the onset of your franchise venture. Using force will only push your customer further away from paying you and even give you a taste of retaliating force. Arguing never solves any problem.
7) When to Bite the Bullet
The time will come when all of your efforts fail and you have to absorb the bad debt yourself. As they say, that’s one of the “prices” of doing business and a price well spent for a learning experience. As you mature in your franchise you will develop better sensors on who to give credit to and who to avoid. Every one of your customers or clients has a viability factor: who is worth more to you than others. But remember, it’s not always about your early-paying customers; many times it’s those hard-to-reach and never-pay-on-time customers that are your most valuable.
Management is about balance – about balancing the pros and the cons, the ups and the downs, the “ifs” and the “buts” with the goal of achieving the greater good for your business.
