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LEARN HOW TO START, RUN, OR GROW YOUR CREDIT REPAIR BUSINESS

Getting Paid: What to Do if a Credit Repair Services Client Owes You Money

By: Daniel Rosen June 05, 2017

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If you run a credit repair services business there will come a time when a client decides not to pay you. It won’t be fun and you likely won’t see it coming, but it’s not the end of the world and handling it correctly will protect your business, reputation, and sanity.

Developing a process that you can follow whenever someone skips out on their bill is something all business owners should do, but it’s important not to obsess over it and keep it all in perspective. On average, only 1% of clients will refuse to pay you and while it’s helpful to have a plan in place when that happens, focusing on the other 99% is what’s going to help you grow your business.

The obvious first part of this process should always be to halt work immediately, but there are other steps you should take in order to try and re-engage the customer and hopefully recoup payment. Above all, make sure to keep a level head and understand that this is part of the job and your energy is better spent gaining new clients than chasing old ones.   

Internal Audit

If you notice a trend of clients not paying their bills, take it as a red flag that something may be “off” in your processes. Ask yourself some “big picture” questions as the health of your business may be at stake and the unpaid bills may just be a symptom:

Are you truly providing value to each client?

Typically when they perceive value in the service they get, they will readily pay your bill. Could the unpaid invoice signal an unhappy customer? How can you seek to better understand the needs and pains of your clients and offer valuable solutions?

Are you attracting the wrong type of client?

Credit repair clients are not necessarily people who systematically do not pay their bills. Often they are people who had some misfortune (or simply an oversight) and are trying to get on the right track. Where are your clients coming from? Why are they attracted to your offering? Is there something in your advertising that is attracting the wrong kind of client? How can you appeal to the “good apples” who are committed to cleaning up their finances?

Once you complete this internal audit and fix the root cause of the problem within your own business, you can proceed to handle the few “bad apples” who do not pay.

What to Determine Beforehand

Every good plan needs a schedule that explains when to do what. When it comes to the credit repair business, this timeline has 3 different components: pay date, timeline, and consequences that will help you determine what kind of grace period you will afford delinquent clients and what happens if they never pay.

  • Pay Date - The absolute last day a client can pay you and still receive your services. This date will be included in subsequent correspondence so it’s best to determine it up front. Typically, most credit repair business owners give their clients 30 days before ceasing work. 
  • Timeline - Your process should follow the same schedule every time and laying out the steps will make it much easier to manage in the course of day to day business. For example, if you send an automatic invoice reminder 3 days after a missed payment, schedule the follow up for a 4 days after that and know that 7 days before your “pay date,” you’ll send your final notice. 
  • Consequences - While other businesses advocate for sending delinquent clients to collections or small claims court, we believe it’s best for to simply suspend all work and move on. Remember, very few clients will refuse to pay and we believe your time is better spent adding to your client base than chasing the few that got away. Taking the high road here will not only make it easier on you, it will give your reputation a boost as well.

Developing a Non-Payment Process for Your Credit Repair Services Business

All processes are not created equal and while yours is sure to evolve alongside your business, there are some pillars upon which it should be built. Taking the time to establish something now will save you the headache of having to develop it on the fly when you may be distracted or emotional.

Start with an Automatic Reminder

If you’re using Credit Repair Cloud with Chargebee, then sending automatic payment reminders should already be built into your invoicing workflow. Your clients are human and if they simply forgot to pay you, then simply sending a reminder email is often all it takes to jog their memory.

We suggest setting this reminder for 3 days after the due date, so if payment is due April 1, the reminder will go out April 4.

Include a Personal Follow Up

If your automatic reminder goes unanswered, don’t hesitate to send a more personalized (but still civil) email as the next step. Again, you want to give clients the benefit of the doubt when it comes to non-payment and appealing to them on a one-to-one basis is an intelligent next step.

Always be graceful - even dealing with the 1% of “bad apples.” Protect your reputation - it may be the most valuable thing you have.

Using the same timeline as above, we suggest scheduling personalized follow ups at least 4 days after the automatic one goes out. So, if your reminder is sent on April 4, send something more personalized a week later.

Send a Final Invoice

There is no rhyme or reason to why people stop paying their bills and sending a final invoice informing them that you will be suspending their service is an easy way of trying to recoup your money one last time. Make sure to send a version that is amended with your “pay date” so they know how much time they have to pay.

If you follow the suggested 30 day timeline we mentioned earlier, try and send the final invoice 1 week before the pay date.

Mark Them as Suspended and Move On

Take our advice when we say that nothing good will come of trying to chase down every dollar you’re owed - it’s much better for your sanity and your business to simply mark the client as suspended, prevent their login, and move on.

Instead, focus your efforts on attracting the clients you want and enjoying those that pay on time and appreciate your services.

A Sample Timeline

Here is a timeline used by some credit repair professionals for dealing with customers who do not pay on time for their credit repair services. Feel free to use this as a basis for your own plan:

Elapsed Time

Sample Date

Activity

 

April 1

Invoice due date

+ 3 days

April 4

Send an automated reminder

+ 7 days

April 8

Send a personal email

+ 21 days

April 22

Send final invoice

+ 30 days

May 1

Final Pay Date (Stop Work Date)

Planning Ahead

The unfortunate reality is that unpaid invoices are a part of running a business and it’s likely that you will encounter it if you provide credit repair services long enough.  If you’re just starting your business, it’s best to take some time now to develop a plan of action but also remember to focus on serving and finding quality clients.

If you’re growing your credit repair business and are reading this because you’re facing a similar situation, it’s never too late to act. Documenting a process as you work through the issue can be just as effective as planning ahead, though you might be under more stress.

Whatever process you develop for your customers, don’t let it monopolize your time - it’s much more advantageous to simply write off the bad clients and turn your efforts to building your business.

Want to learn more about making money with credit repair?  Check out our guide on Getting Paid!  

guide to getting paid for credit repair servicesDOWNLOAD NOW

 

 

Topics: CREDIT REPAIR

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