What steps should be taken when a customer defaults on payment?

When a customer defaults on payment, it is essential to contact the customer and negotiate a payment plan. This approach fosters communication and understanding, which can lead to a resolution that benefits both parties. Engaging with the customer allows the company to understand any issues that may have caused the default, such as financial difficulties or a misunderstanding about the payment terms. By negotiating a payment plan, the business can work with the customer to create manageable terms that encourage payment and potentially maintain a positive relationship.

Establishing a payment plan can also demonstrate goodwill and willingness to work with the customer, increasing the likelihood of recovering the owed amount over time rather than having it immediately sent to collections or ignored altogether. Open dialogue not only helps in resolving the current issue but can also strengthen customer loyalty and reduce the probability of future defaults.