Tips to Reduce Late Payments by Engaging Payers
Late payments are on the rise, and they can weigh down your organization's growth if they go unaddressed.
Auto loan and credit card delinquencies have bounced back to their pre-COVID rates, and late payments on consumer loans aren't far behind . With these indicators, merchants in other industries might be right to wonder if they'll see more missed or late payments—assuming they haven't already.
Organizations are well aware how late payments can disrupt cash flow. As they add up, they can limit the ability to make the investments needed for growth, from purchasing new equipment, to hiring talent, to ordering inventory. Then there's the cost of collecting late payments: sending out notices, attempting to call customers, engaging collection agencies, and so on.
Consumers often miss payments due to a lack of funds, but a large chunk of late payments are highly preventable. Among consumers who missed a payment in the previous six months, nearly half said either forgetting about the bill or mixing up the due date were factors, according to a recent survey.
So what can organizations do to help customers pay on time? By keeping them engaged with these approaches.
Make the payment experience as easy as possible
Many late payments result from transaction abandonment, which is a usually fixable problem in the customer's payment journey. Sometimes the abandonment is accidental: think of how easy it is to get distracted in the process of paying a bill online or over the phone if it requires multiple steps. Other transaction abandonment is deliberate: perhaps the customer became frustrated to learn that they can't make their payment online, and they put off the task for later.
To reduce transaction abandonment—accidental or otherwise—it's important to make the payment experience as simple as possible.
Accept multiple payment methods.
You want to ensure most of your customers can use the payment method they most prefer, whether that's credit/debit card, ACH, digital wallets, and yes, paper checks ( 55% of U.S. consumers wrote checks in 2022).