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Galaxus customers pay one in four invoices late. Online shop operators also struggle with customers who never pay.
Sara Fröhlich is familiar with customers who order, receive the goods, but never pay. She designs and sells craft boxes for children. Individually or as a monthly subscription. For 10 to 20 percent of all orders, she has to chase the money after shipping. First with an email, then with a warning.
The very first order was from someone who didn’t pay.
However, initiating a debt enforcement is too time-consuming for you, who design and send the craft parts and instructions for the dream catcher or the gnome garden themselves. “My business is too small for that, it’s not worth it.”
Legend:
For 10 to 20 percent of orders, Sara Fröhlich has to chase the money.
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10 to 20 percent: Debt collection expert Raoul Egeli is not surprised by such high numbers. According to him, customers know that they are not taking a big risk and will hardly be prosecuted, especially for small orders.
Egeli gives an example: An order of 300 francs, 5 percent margin, so 15 francs remain with the shop. It’s not worth paying the operating costs of 17 francs.
Consumers know that small amounts will not be enforced.
The fair trade food retailer Gebana also has experience with people who are unwilling to pay. According to managing director Christophe Schmidt, in Switzerland only a fraction of the goods ordered are not paid for, but in the EU this is 6 percent.
In one case in Germany, a customer placed 43 orders worth a total of 17,000 francs but never paid. The attempt to collect the money failed. “We had to write off the amount,” says Schmidt.
Legend:
Online shopping encourages some customers to pay for their goods late or never at all.
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What to do? Sara Fröhlich only delivers if paid in advance. Gebana also introduced this in the summer, but not to the delight of customers. “It wasn’t long before we had complaints from customers who wanted to order on account without logging in,” says managing director Schmidt.
This also had an impact on the number of orders. After four weeks, ordering on account was possible again – under certain conditions.
After three reminders, debt collection follows
And then there are the customers who pay, but only after repeated requests. Example: Digitec Galaxus: Customers who order on account pay one in four invoices late. If payment is not made even after three reminders, Digitec will initiate debt collection.
Shop operators and other companies are increasingly using the services of debt collection companies. There are currently over 5 million dossiers piling up at debt collection service providers across Switzerland, as Raoul Egeli says. The total is over 11 billion francs. Money, waiting for the company for which they have already provided a service.