4 Techniques for Collecting on Past Due Accounts

In this article, we cover the best techniques for collecting on past due accounts without losing clients. Collecting payment is always a touchy subject, and it’s a delicate balance between being firm enough to get paid and polite enough to avoid souring the relationship. This is an especially pressing issue for young companies in the security industry that don’t have well-established practices, customer relationships, or the cash to weather non-payment.

Want to go further? See why billing errors are the number one reason security companies lose clients, and how to fix them before they turn into past due accounts.

Technique #1: Use A Personal Touch

Get to know whoever manages your invoices on the customer’s end, and do your best to develop a good personal relationship with that individual. That means giving them the benefit of the doubt when payment is late, and approaching the issue from a collaborative perspective rather than a confrontational one.

That means communicating clearly with them, finding out what’s the most convenient time to submit invoices, and firmly establishing what paperwork they need from you each month. Having these conversations increases the odds of future discussions being harmonious, and it reduces the potential excuses for non-payment.

Chris Anderson, co-host of The Silvertrac Extra podcast, jokingly discussed times when he was tempted to try a bribe in order to get payment. In all seriousness, the occasional small gesture, such as a $10 gift card, as a thank you for them helping to create a productive relationship, can be a nice way to ensure prompt future payment.

Set clients up to pay on time from day one

• Confirm the right contact. Know exactly who processes your invoices and who approves them.
• Ask what they need. Purchase order numbers, timesheets, proof of service or a specific invoice format.
• Agree on timing. Learn when their payment runs happen and submit invoices to match.
• Put terms in the contract. Payment terms, late fees and what happens after 30 or 60 days should never be a surprise.
• Check gift policies first. Many organizations restrict gifts from vendors, so confirm the client’s policy before sending even a small thank you.

TrackTik Contracts & Invoicing stores each contract’s billing rates, services and terms, and supports customizable invoice formats and billing frequencies, so every client gets the invoice they expect.

Technique #2: Bring In An Additional Party

Despite your best attempts to create a positive relationship with the individual overseeing payment on the customer’s end, sometimes they will stonewall you and continue to make the same excuses. In these cases, it can be useful to loop in an additional party, such as their boss or a regional manager.

“You don’t need to say much when you’re doing this,” I tell Chris, “just loop them in and say ‘Hey, I’m assuming that there was some oversight on this, I just need to make sure that we get this resolved before we have to either send this to collections or discontinue service.’”

A sample escalation schedule

Days past due	Action	Contact	Tone
1 to 7	Friendly reminder with a copy of the invoice	Accounts payable contact	Helpful: assume it was missed
15	Follow-up call, then resend the invoice with supporting documents	Accounts payable contact	Collaborative: ask what is holding it up
30	Loop in a manager, as described above	Accounts payable contact and their manager	Direct: request a payment date
45	Formal written notice that references your contract terms	Decision maker	Firm: outline the next steps
60 or more	Collections, legal review or a change in service, as your contract allows	Decision maker	Final

Before you suspend service or send an account to collections, check your contract terms and the laws that apply to you. TrackTik Business Administration includes profitability analysis by client, site or service, so you can see which accounts deserve the most attention.

Technique #3: Use An Accounts Receivable Manager App

There are a number of apps out there today that help companies manage their receivables. Using these apps helps formalize the payment process and establish clear timeframes for payment from customers. They also reduce the possibility of paperwork getting misplaced or forgotten.

These apps also establish the processes if payment is late by automatically taking certain steps at 15 days past due, 30 days, etc. These apps can be a nice way of reminding your problem customers that, while you may be personable and friendly, this is still a professional relationship and they need to make payments on schedule. Remember technique #1, and still give them the personal touch, and let the app be the bad guy for you if it’s time to get tough.

If your operations already run in TrackTik, invoicing does not have to live in a separate app. The TrackTik Back Office Operating System Suite turns verified hours into payroll-ready timesheets and accurate, contract-aware invoices in days rather than weeks.

Why accurate invoices get paid faster

• They match the contract. Rates, services and billing periods line up with what the client signed.
• They match the work. Invoices built from scheduling and attendance records reflect the hours actually delivered.
• They come with proof. Patrol and incident reports give the client evidence of the service behind each line item.
• They go out on time. The sooner the invoice is sent, the sooner the payment clock starts.

Billing mistakes cost more than a late payment. Unbilled overtime is one of the most common, and these 3 ways to prevent unbilled overtime costs help protect your margins.

Technique #4: Invoice Factoring

Essentially, invoice factoring means selling your accounts receivable to a third party. They pay you right away and take on the risk of nonpayment, but they also keep a cut of the payment. No one likes losing a percentage of their payment, but for big accounts invoice factoring can protect you from a major cash crisis.

“When you’re in larger contracts, it leaves you no option unless you have someone that’s financially backing you up,” says Chris. “You take on a big contract, that’s a big payroll, and if you do get messed it can bankrupt you.”

For smaller clients, invoice factoring can be problematic. Not only do they get a cut, but also the intermediary distances you from the customer, potentially weakening the relationship. Try the personal touch first.

Questions to ask before you factor an invoice

• What is the total cost? Compare the fee, any extra charges and how they add up over a year.
• Is it recourse or non-recourse? Find out who is responsible if the client never pays.
• Will your client be contacted? Some factoring companies collect directly, which changes the relationship.
• Are there minimums or long-term commitments? Avoid agreements that lock you in.
• What are the alternatives? A line of credit or better payment terms may cost less.

This section is general information, not financial advice. Talk with your accountant or financial advisor before choosing a financing option.

Cash flow problems often start with concentration risk. If one client makes up a large share of your revenue, read what to do when you lose a big client and review how to maximize your margins in contract security, so a single late payment never puts payroll at risk.

How TrackTik Helps You Prevent Past Due Accounts

The easiest invoice to collect is the one the client never has a reason to question. TrackTik connects the work in the field to the invoice in the back office:

• No retyping. Scheduling and attendance records feed billing directly.
• No rate surprises. Contract rates and terms are built into every invoice.
• Visible value. Clients get real-time access to reports and operational overviews through the client portal in TrackTik Security Operations.
• Connected payroll. Billing and payroll share the same data, with direct integrations to payroll and accounting platforms.

Book a TrackTik demo to see how shift data becomes an accurate invoice.