A defaulter is someone who does not pay his or her bill. This can range from large payments like a mortgage to small payments like a phone bill. It is important to recognise defaulters so you can avoid payment risks.
What is the definition of a defaulter and non-payment?
The definition of defaulter varies from country to country and can also depend on the type of debt. Generally, non-payment is defined as failure to pay an invoice within the agreed period, usually 30 to 60 days after the due date. If the debt is not paid, the creditor may take steps to recover the debt.
When is someone a defaulter?
However, if you pay one day late, you are not immediately a defaulter. A person is considered a defaulter if he or she has failed to make several payments within the time limit. The person may have financial problems or may have deliberately failed to make the payment. It is therefore good to look, why the non-payment is taking place. Calling a customer who always pays neatly on time and forgets a payment once a defaulter is not always fair. Default can lead to termination of a contract or withholding of future services.
What is the cause of defaulters?
Often the cause of non-payment is forgetfulness or inability to pay. Especially with options like post-payment, it is more common for people to pay a bit later. There are also people who show misbehaviour on purpose. It is good to look at why an invoice is not paid. That way, you can take into account what approach is needed and how to deal with defaulters.
Recidivist defaulters
Recidivist defaulters are individuals who are repeatedly late in paying or do not pay at all. These individuals may pose a higher risk to creditors and may eventually be classified as irrecoverable. Therefore, preventing defaulters is important.
How can you recognise defaulters?
Defaulters can be recognised by several signs, such as repeatedly missing payments, not answering calls or emails from creditors, or having many outstanding bills. It is important to take quick action when signs of non-payment are observed to avoid default risks.
Do you have questions about non-payment and how Factris can help with this by using factoring? Feel free to contact us.
