Talk often to tardy bill payers, Dun and Bradstreet advises

Tuesday 1st December 2009

Companies forced to chase tardy bill payers need to keep communicating with the debtors to ensure the speediest repayments, according to debt collection firm Dun and Bradstreet.

Listing payment days on an overdue invoice is not enough to alter late-payers’ behavior, the firm said in a study released this week.

“Creditors must make their customers aware that late payments will be reported to a credit bureau – the clearer this is, the more likely your bill will be given priority,” the firm said. “Communication about listing payment times can improve business cash flow by encouraging customers to pay their debts earlier in the cycle.”

The company’s recently released Payment Priorities Study contains responses and conclusions from over 800 surveyed New Zealand companies.

The study said that reversing or halting the trend of increasing delinquencies and write-offs is dependent on two key elements: understanding how customers prioritise their bill payments; and how payment behaviours can be influenced.

Among the report’s findings is that over half of bill payments have become tardier in the past 12 months due to cash flow issues and customers’ paying late. Not surprisingly, minor suppliers were the most likely to be paid late.

The response to late bill payment resulted in contact by the company that provides the product or service in 59% of cases. Some 40% of firms received no contact about their overdue bill, while contact by a collections agency was used in just 1% of cases. A telephone call was the preferred way that companies wished to be reminded about an overdue bill.

The report concludes that “debtor behaviour will only change if customers understand or are impacted by the consequences that result from their actions.”

“The research – which examined the impact of default listing on customer payment behaviour – shows that the firms which derived the most significant benefits communicated frequently with their customers in various ways,” it said.

Businesswire.co.nz

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