We are all, unfortunately, familiar with this scenario.
You finished the job for your customer or shipped your product. Your invoice is now past due so you call to give your client a little nudge.
No one takes your call so you leave a message. And then another message and an email for good measure. After getting no response for several months or a “we’ll look into it”, you have had enough.
No one has responded at all, it is 90 days past due and you are furious. You delivered on time, the least they can do is get back to you. You point all this out in an email but still get no response.
So you send them a final warning – if this isn’t paid you will turn the matter over to someone else.
Finally, you get a reply, but to your surprise, they suddenly bring up problems they have never mentioned before. You do not believe their complaints are valid but at this point, you just want to get paid and say farewell to these people. Fine, you say, if I give you a credit for this amount will you pay the rest? After getting assured that they will pay your bill you send them a credit, glad that you can put this behind you.
You go back to doing what you do best and 3 months later it comes to your attention that they still have not paid you. Now after reducing the amount of the invoice, you will have to hire someone to collect your money for you.
“That”, you think, “is the last time I issue anyone a credit.”
It may not be a bad idea to issue a credit to a customer, even if you feel it’s not really a valid request, as long as you resolve the payment problem with some finality. What you do not want to do is paint yourself into a corner so that you are stuck with the delinquent client and a reduced invoice.
The way to avoid that is to make the credit conditional on it being paid by a certain date or it expires.
Make sure your client understands that you are doing this to maintain the relationship and that this is a onetime offer. It should be clear that if the reduced amount is not paid right away, the credit will be canceled and you will take steps to collect the full amount.
This should all be done in writing even if you have discussed it on the phone already.
Remember the pen, or should I say the keyboard, is mightier than the phone; at least when it comes to unpaid accounts.