What Your Business Really Loses When Customers Don’t Pay

Blog thumbnail

Dealing with customers who don’t pay is a reality for many businesses. And while a customer’s reason for not paying will vary, it amounts to the same for your company. Here’s what your business really loses when customers don’t pay.

The Real Costs

While your service and product costs are the most obvious loss when a customer won’t pay your bill, there’s more to the story. There are many costs associated with a company’s products and services, including manpower and hours. Consider the time, effort, and manpower it takes your company to provide its products or services. What are you losing when your customers don’t pay? Review your project margin to see what you lose on a single missed payment — what sort of revenue would you need to make up that debt?

Some businesses take the path of least resistance — it’s much easier to ignore a customer who won’t pay, and the alternative is devoting time and resources to chasing down that debt. And while it may seem that a single missed payment won’t make or break a business, even a small amount of bad debt can have a big impact. That’s particularly true in industries with small profit margins. There are bad debt calculators online that will quickly clarify what your unpaid debt is really costing your business, and what you’d need in terms of new revenue to cover the loss. It’s often an eye-opening number.

Next Steps

Once you’ve identified the real impact of bad debt to your business, you can take steps toward a resolution. To get you started, we’ve shared what a business should do if a customer won’t pay, when a company should hire a collection agency, and how to find a reputable agency.

The fact is, if a customer won’t pay or respond to your efforts to reach them, your best chance at recovering some of that debt is by bringing in an experienced collection agency. Contact Business and Professional Collection Service to learn more today.

Back to Blog

ACA International
Agency License Number: CA10014
Personnel License Number: CM12614
Better Business Buereau

Industries We Serve