B2B Payments

The Art Of Getting Buyers To Pay

For businesses, selling is the lifeblood of their operation. But how well they are able to collect on payments owed can be equally important to their viability. And those-hard-to-collect payments often take up time better spent focused on day-to-day and strategic issues.

As PYMNTS.com has reported in past stories, companies have a variety of resources available to them to help in the collections process, includingspecialized software that automates manual processes to help increase cash flow. But as more and more companies arebeing pressured to extend due dates to 120 days or more, it becomes increasingly possible for buyers to experience their own financial issues over that extended time, thus making payment collection that much more difficult for sellers.

So what should businesses, including small ones that often lack the resources to spend much money, much less time, on the collection process do? A recentForbes article addressed the subject, bringing in the expertise of Howard Weber, a collections lawyer who has practiced law for 32 years.

In the piece, Web noted that, although we are living in especially difficult times these days, all businesses generally have difficulty collecting payment. “Goods and services” companies tend to be affected most with complaints of defective products or that services weren’t properly provided.

B2B advice

To help avoid a buildup in receivables, Weber suggested that small companies require potential customers to complete a detailed application. Those that are hesitant to do so often indicate a potential problem.

Applications also help to get more information about the company, such as whether it’s a corporation, partnership or sole proprietorship, he noted. “Corporations can be checked on the secretary of state website to see if they are current with franchise taxes or have been dissolved for nonpayment by the state,” he said in the article.

Just as when deciding whether to employ someone, asking for references also can help. In the B2B environment, finding out experiences from other vendors that have worked with the company can help weed out potential problems in the future, Weber indicated. “Most importantly, if you can, get a deposit or part payment up front to see early on if there’s going to be a problem,” he recommended.

International issues

Because it can be more difficult for vendors to collect from international companies, Weber said he suggests to his clients that they include a jurisdiction and governing-law clause and make it in the credit’s home state. “Then, once a judgment is obtained locally, it can more easily be converted into a foreign judgment outside the U.S.,” he said “And once a judgment is obtained in that foreign country, the debtor will usually pay since his assets are at risk.”

Moreover, Weber said his firm tends to have a high success rate collecting for foreign companies with debtors in the States. “Once debtors know local counsel is after them, they tend to settle quickly,” he said.



Featured PYMNTS Study: 

With eyes on lowering costs to improving cash flow, 85 percent of U.S. firms plan to make real-time payments integral to their operations within three years. However, some firms still feel technical barriers stand in the way. In the January 2020 Making Real-Time Payments A Reality Study, PYMNTS surveyed more than 500 financial executives to examine what it will take to channel RTP interest into real-world adoption. Here’s what we learned.

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