Not every customer can pay a claim in one go. By offering a payment plan, you help the customer and ensure that you are getting paid. But, how do you ensure successful payment plans? And how do you support that with software? We answer those questions and more in this blog.
What do we mean by a payment arrangement
You agree on a payment arrangement if a customer can’t pay an invoice in one go. The terms of repayment of the claim depend on the financial possibilities of the customer.
Most payment plans have fixed amounts per month. You can also agree on different terms per month.
How do you determine the repayment capacity
That brings us to the question of how you determine what someone can repay. With an amount of € 150, this is less of a issue than with € 10,000.
The higher the claim, the more information you want to determine what someone can pay. It concerns income, fixed costs and other debts.
You should consider that financial problems lead to stress. As a result, people make wrong decisions or don’t respond. Therefore, go for what is feasible for the customer and not for the highest instalment amount. It increases the chance that someone can comply with the payment plan.
Making paying easy
For the best result, you want to think along with the customer. That’s the whole idea of a payment plan, and that’s why you have to make paying as easy as possible. You can do this in different ways:
- Send a reminder by email or SMS a few days before a instalment is due. This way you ensure that people don’t forget the upcoming instalment.
- Give the customer the option of paying through channels such as iDeal or Apple Pay. It lowers the threshold.
- Combine the first two and add a payment link to the reminder you send.
How easier it is to pay, the greater the chance that someone pays. And thus comply with the payment plan.
Act on late payment
When a customer doesn’t comply with the payment arrangement, you need to act as soon as possible after the due date of an instalment. How you respond depends on several factors. Has the customer missed previous instalments? Do you have time to call the customer?
Some customers just needs an extra reminder. Sending an e-mail in which you point out the late payment can then be sufficient. This gives the customer another chance to comply with the payment arrangement.
A reminder by e-mail is efficient in terms of time and will lead to payment in some cases. When you add a payment link, you also increase the chance of payment. In case that doesn’t lead to a payment, you may want to call the customer. Personal contact might help. After all, there is already an exception and another letter or e-mail often won’t lead to a solution.
If a customer has failed to pay multiple times, other steps may be more appropriate. Think of transferring the claim to a collection agency or bailiff. Although that might only lead to extra costs.
Payment arrangements with companies
There are a few differences for payment plans with companies. The goal is that the customer pays you before for other creditors, and you need other information.
With companies, you want insight into the arrears with the tax authorities and the payment of salaries. Salaries are one of the last items a company doesn’t pay. So when that happens, you know that there is a higher probability of default.
Unlike consumers, most companies receive payments on an ongoing basis. You therefore prefer to agree on weekly payments rather than per month. The amount of an instalment will be lower, but you do have more control because there is less time between instalments. If the financial situation of the customer deteriorates, you will see this sooner and you can take action.
Read how AgroEnergy manages business payment plans for customers for which there is no invoice yet.
Manage payment arrangements with software
There is one last topic, and that is managing payment plans. When you have one customer with a payment plan, management is simple. You add a note to your calendar and check whether a payment has been made on the agreed day. But what if you have thirty active payment plans? Or two hundred?
A frequently used feature in our software MA!N is the management of payment arrangements. It takes most of the work off your hands so that people can help customers.
MA!N supports all the features we mentioned above, like:
- recording the instalments;
- sending a confirmation;
- sending periodic reminders;
- monitoring whether payment are received on time;
- follow up when a customer misses an instalment.
MA!N credit management software enables you to help customers who can’t pay. And while you do that, you make sure that invoices are still paid.
Are you curious what MA!N can do for you? Read more about our credit management software.