I recently posted a blog on effective ways to enhance the collection of overdue receivables, but afterwards it occurred to me that there are two approaches: the carrot and the stick. Generally, I have favored the carrot: developing a relationship to build sympathy and a sense of commitment to solving a non payment problem. I figure that there is no such thing as a bad customer, just a bad payer, and that in the grand scheme of things we dont want to lose any customers unless they are total dead beats. Therefore it is important to try and work through the problem without resorting to threats, since such actions, even if succesful, are likely to upset the future business dynamics.
I am curious on current practices and frequencies of referring bad payers to D&B, collection agencies or legal action, and how effective it may be, and at what price. Does anyone have any views on this matter?
