Utah Contractor Practice Exam

What is the best method of handling a customer's account that has gone past 30 days?

1. Send it to a collection agency

2. Contact the customer and put them on a new payment schedule

3. Begin to charge interest on the customer's account

4. Stop work immediately

The correct answer is: Begin to charge interest on the customer's account

Charging interest on the customer's account is a proactive approach that can encourage timely payment in the future while still keeping the account open for business. This method demonstrates that the contractor values the payment process but wants to protect their business interests by compensating for the delayed payment. It can serve as a reminder to the customer of their financial obligations without severing the relationship or escalating the situation prematurely. In contrast, sending the account to a collection agency might be seen as confrontational and could damage the relationship with the customer. Contacting the customer and putting them on a new payment schedule is also a viable approach, but it may not provide immediate financial relief or accountability for the delayed payment. Stopping work immediately could halt progress on the project and create further complications, reflecting poorly on customer service. Implementing interest can foster better payment habits while maintaining a constructive relationship with the customer, making it a strategic choice in handling overdue accounts.