By Kevin Gephart

My post on Handling Handling Collections During a Disrupted Market generated this question from a reader.

I have a client that has had a perm’d billboard for a while. Because this past year was especially rough they have fallen behind in payments and their annual contract is up for renewal. How should I address this?

I will make some assumptions:  you value this client, going forward, you think they will be a profitable, viable business.  If you have some doubts about their viability, ask them to sign a “personal guarantee” for the balance owing. It can be tough but if they really want to preserve their lifeline of advertising, they will do it. It gives you much greater leverage if you must take a legal action to collect the bill.

I would take a comprehensive approach to both the renewal and the collection issue at the same time.  I would frame it in a very convincing statement about how you view them as a strong partner and you want to be a resource to help them through challenging times.  How you position/sell your ongoing partnership to the client at this point will gain a lot of loyalty on the short and long-term.

Here is what your overall approach should be: in consideration for their successful payment of the past due balance, you’ll renew their board beginning on the renewal date for X amount of dollars. They also agree to an overall monthly payment schedule paying their current billing amount of $XXXX along with a payment of $XXXX (a certain percent of the overdue bill) for the past due.  The amortization of their old balance obviously should be blessed by your management.  When the client agrees, you renew their contract now effective on the contract renewal date.  As a part of the contract terms, you include the monthly payment amount that will begin immediately and continue until the past due balance is paid.

Send your questions to KevinJGephart@gmail.com

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