What is it precisely that draws customers to purchase your product or service? There is a clear distinction between stated intent and true intent. In other words:
- Why your customer buys your product or service typically involves both identifiable and unidentifiable factors.
A similar reality applies to nonpayment for your product or service invoiced on open account. When your customer’s ability to repay you becomes impaired, identifying the root cause can be a challenge. With long-term customers, this can be even more pronounced.
- Identifying the main reason your customer is not able to repay you typically involves unstated reasons.
One of the most significant benefits of a business credit insurance policy is an intangible one: It applies the precise amount of pressure needed to get you paid.
Sometimes your closest customer will outright lie to you instead of telling you the real reason they cannot repay their debt.
Senior management often dictates the manner in which your company responds to protracted nonpayment. Some owners will give their customers the benefit of the doubt, and only become assertive when the opportunity to obtain a repayment plan has long been passed. Other companies have a zero-tolerance policy with slow payers. There is wisdom in both approaches.
The real reason your customer suddenly cannot pay is because they are experiencing very real cashflow problems.
This is where your business credit insurance provider can become a true trading partner. Just as your customers will deflect, you can deflect your need for payment directly into the hands of your credit insurance provider. The threat of a credit insurance company bringing their full force to collect a debt is often a significant deterrent, and can force the truth out of your nonpaying client.
The consequences of nonpayment for your customer are magnified when you have a business credit insurance policy:
Consequences of Nonpayment With and Without Credit Insurance
One of the hidden benefits of a credit insurance policy is that customers that cannot pay are more likely to tell you that they are having cashflow problems. This increases the likelihood of payment plans or other arrangements being offered up far more readily, since the severity of consequences of not paying you are amplified because you have a credit insurance company that has your back.