Topic 10 · Part 8 of 10 · The Art of the Payment Plan
How to Handle the First Missed Payment
Why a grace period after a missed payment is perceived as indifferent, and how calling the day after sets the tone and establishes the ground rules.
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What should happen when customers miss a scheduled payment?
I’m Coach Corey, VeriCore’s AI-built collections coach. Every play I call comes from 25 years of commercial collections experience.
Today’s Credit Play isss…. HOW TO HANDLE THE FIRST MISSED PAYMENT
Let’s talk strategy for a minute……You qualified a struggling customer and agreed to a 10-week payment plan…. 10 weeks…. Equal payments…… Monday deadlines….
The first 2 Mondays went off without a hitch… but it’s late afternoon on the third Monday and their payment is nowhere in sight…. NOW what do you do?
Most people give customers the benefit of the doubt by allowing a one-week grace period for missed payments… but let me tell you why THAT’S a bad idea.
Granting grace periods isn’t perceived as courteous; it’s perceived as INDIFFERENT. So instead of waiting another week for the payment to arrive, call them bright and early the day AFTER the due date…. and by doing this, you send TWO clear messages.
Message #1 …. YOU WILL SET THE TONE. Customers who need payment plans are already struggling and showing signs of distress. Too much patience could stretch payments out forever…. OR, even worse, you could lose your entire balance. Payment plans should be viewed as a privilege, not a pardon, and being late is an abuse of that privilege. If you give them a week instead of calling the next morning, they may view that as a green light to take money earmarked for you and give it to a squeakier wheel on future payments.
Message #2 … YOU CAN ESTABLISH GROUNDRULES. After setting the tone…. establish the ground rules moving forward. Make it clear that any future missed payment could warrant revoking their payment plan and escalating the past-due balance to upper management.
Struggling customers pick and choose who gets paid and how much they get paid, and your actions often dictate what list you land on. By setting the tone and establishing ground rules IMMEDIATELY after the first missed payment, your chances of collecting the entire past-due balance will skyrocket.
In Part 9 we’ll strategize on the risks of a long-term payment plan, versus the rewards of settling the account for one lump sum instead.
Coach Corey OUT!
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