---
title: "How Can Distributors Solve the Difficulty of Collecting Payments?"
description: "Difficulty in collecting payments is an indisputable fact in the food industry. Therefore, actively exploring the causes of this long-standing problem and finding solutions is of particular significance for distributors to escape the trouble of payment collection and reduce operational risks."
author: "New Distribution"
publisher: "New Distribution"
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published: "2015-12-11"
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# How Can Distributors Solve the Difficulty of Collecting Payments?

> Difficulty in collecting payments is an indisputable fact in the food industry. Therefore, actively exploring the causes of this long-standing problem and finding solutions is of particular significance for distributors to escape the trouble of payment collection and reduce operational risks.

Difficulty in collecting payments is an indisputable fact in the food industry. Therefore, actively exploring the causes of this long-standing problem and finding solutions is of particular significance for distributors to escape the trouble of payment collection and reduce operational risks.

Multiple Manifestations of Payment Collection Difficulty

Where exactly does the difficulty lie? In actual market operations, payment collection difficulties manifest in the following forms:

1. Inability to collect or zero collection. Non-staple food products typically enter distribution channels such as circulation channels, retail terminals, hypermarkets, and catering terminals. Due to special reasons—such as poor management leading to restaurant transfers or shops disappearing overnight—some payments can never be recovered, resulting in bad debts or doubtful accounts.

2. Collection possible but torturous. Although the payment can eventually be settled, due to factors from the distributor or manufacturer—such as untimely delivery or inadequate service—customers deliberately make things difficult, withholding payment until you are exhausted, then paying in small increments, leaving you utterly frustrated. This is more common in KA stores, B and C category chain stores, and catering terminals.

3. Collection possible but long-delayed. Due to product characteristics and brand influence—such as low sales volume or long usage cycles—some non-staple foods have relatively long collection periods, often taking three months, six months, or even longer, making distributors wait anxiously for their money.

4. Collection possible but full of twists and turns. Some customers seize on distributors' operational "shortcomings" or "defects" to threaten them, such as demanding VAT invoices, discounts, or store anniversary fees; otherwise, they threaten to remove products from shelves or refuse to settle accounts, making the collection process full of obstacles.

Of course, in market operations, failing to abide by industry "unspoken rules," or not being adept at "public relations" and "dealing with people," can also lead to abnormal manifestations of collection difficulty, such as "difficult doors, unpleasant faces, and hard-to-settle accounts."

Multiple Causes of Payment Collection Difficulty

The causes of collection difficulty include the following:

1. Weak brand strength. A key factor leading to collection difficulty is weak brand strength, resulting in low recognition at sales terminals (stores, retail terminals, hereinafter) or consumption terminals (catering, hotels, entertainment venues, etc.). In such cases, it is often difficult to secure better settlement cycles, leading to credit sales with "pay later" arrangements, laying the groundwork for customer arrears.

2. Poor product sales. After products enter sales or consumption terminals, factors such as display, restocking, seasonal fluctuations, and brand strength can lead to poor sales or consumption, low sales volume, and little cash flow at terminals, making them easy to overlook or ignore, thereby delaying settlement and causing corresponding collection difficulties.

3. Many legacy issues. Some distributors or manufacturer salespeople, for personal gain such as salaries and commissions, often make casual promises to terminal customers, such as rebates or promotional items. Customers remember these promises and use them as excuses when settling accounts, demanding fulfillment of previous commitments; otherwise, they refuse to pay, creating collection difficulties.

4. Inadequate service. Some distributors lack service awareness, which is also an important cause of collection difficulty. For example, during peak seasons, due to supply shortages, they neglect customer relationship maintenance with sales and consumption terminals, resulting in untimely delivery, delayed promotions and rebates, and slow bottle returns for beer and beverages, causing customer dissatisfaction and deliberate "fault-finding" during settlement.

5. Too casual credit. Some distributors, to appear generous, often allow arbitrary credit after goods enter stores without properly signing written agreements that protect their interests. Without formal sales agreements and specific payment terms, only an IOU, it becomes easy to encounter trouble when collecting later, wasting unnecessary words and creating collection defects.

Of course, other causes include sales or consumption terminals suffering from poor management, heavy losses, or inability to pay. These should be treated and analyzed differently. Only by clarifying the various factors causing collection difficulty can distributors take measures to prevent problems before they occur and better collect payments.

Five Methods to Solve Payment Collection Difficulty

1. Kick the Final Shot: Techniques for Collecting Payments

Before going to collect payments, first do your homework. Check whether relevant vouchers are complete, accounts are clear, and identify the key person responsible for clearing debts. Familiarize yourself with common customer delay tactics and prepare simple responses.

Second, China is a land of etiquette. When facing debtors, communicate politely, treat them with respect, and give them positive evaluations and praise. This way, debtors will identify with you and like you, making collection relatively easier. However, in actual communication, maintain a balance and do not blindly accommodate customers. Besides maintaining a proper attitude, you should also be reasonable, advantageous, and measured, communicating with customers without being servile or overbearing, using sufficient reasons to persuade them, and being careful not to strain the relationship.

Additionally, during the collection process, carefully discern the real reasons for non-payment, judging whether the customer is intentionally withholding payment or maliciously defaulting. For such malicious defaulters, fully employ the "persistence" tactic, with the spirit of not giving up until the goal is achieved, to protect your interests. When encountering customers who deliberately avoid calls and cannot be met normally, you can make a surprise visit directly, preventing them from escaping and ultimately resolving the issue.

A well-executed final shot can greatly alleviate distributors' collection difficulties. Most distributors tend to think about collection only when they need to recover funds, but this often consumes a lot of manpower, material resources, and energy. Moreover, if collection fails, the distributor's capital chain faces great pressure. Therefore, the second topic we discuss is how to predict risks and reduce the probability of arrears from the source.

2. Establish a Credit Record to Prevent Arrears Risks

Every distributor troubled by unpaid payments, to reduce year-end pressure, should establish a database of customer credit records, facilitating tracking and evaluation of partners' creditworthiness, and ultimately deciding how to cooperate and the depth and breadth of cooperation, thus preventing problems before they occur.

Regarding the credit record, we suggest dividing it into three parts. The first part is a basic information table, including the customer company's establishment date, registered capital, fixed assets, turnover, etc., to comprehensively reflect the customer's strength. The second part is a business status survey table, including accounts receivable usage, return on operating assets, inventory turnover, asset-liability ratio, etc., to understand whether the customer's operations are healthy. The third part is a credit record table, mainly recording the company's past debt situations, repayment records, and repayment responsible person information, facilitating direct tracking of the customer's past credit history. With such a credit record, distributor bosses can easily grasp the specific situation of their customers, make targeted decisions, and avoid future payment risks.

Of course, establishing this record does not mean it is done once and for all. Distributors also need to pay attention to subsequent tracking and management. Periodically, based on previous cooperation, reassess customer credit and adjust credit policies and sales policies accordingly. This ensures distributors understand each customer's credit trend in time, identify high-value, high-credit customers, eliminate poor-credit, low-value customers, and minimize bad debt losses.

Through credit records, distributors can do pre-management and minimize losses before they occur. However, once a creditor-debtor relationship is established, credit records are no longer useful. At that point, distributors need to use standardized operations to constantly remind customers of the existing debt relationship, making customers understand that this money is important to us, thereby prompting them to consciously reserve payments and reduce the probability of arrears.

3. Sign Detailed Payment Plans and Regularly Remind of Debts

From the very beginning of dealing with customers, distributors need to sign relevant agreements, determining when and where settlement will occur—whether at the customer's finance department or via direct transfer, and whether payment will be in cash or by check. All relevant content should be defined in the agreement, providing written or legal evidence for future collection, while also conveying the importance we place on this transaction.

Additionally, distributors need to establish procedures to regularly send statements of account to customers, confirming the amount of goods without errors, with both parties stamping and acknowledging, forming legally effective documents. Through this standardized, regular reconciliation system, customers are constantly reminded of the debt relationship, strengthening both parties' attention.

From a psychological perspective, some customers who would not normally delay payment may, if they find the distributor is not very attentive, become even less inclined to prioritize repayment, thinking the money is not important to you and delaying as long as possible. Therefore, distributor bosses need to constrain the other party through a series of standardized operations, which not only serves as a legal warning but also fully expresses their attention, keeping customers with outstanding debts mindful of repayment.

For distributor bosses to have customers repay voluntarily and on time, relying solely on agreements is only one aspect. It is best to create some "subjective initiative" for customers, that is, to generate a willingness to repay proactively. Therefore, we suggest timely follow-up by responsible personnel to help customers develop good payment habits, and establishing simple reward policies for repayment to encourage debtors to pay on time.

4. Establish Reward Policies to Increase Willingness to Repay Proactively

According to research by relevant foreign institutions, the overdue time of accounts is inversely proportional to the average collection success rate. The best time to collect is within six months after the overdue period. If the debt is delayed for more than one year, the success rate is only 26.6%; if more than two years, the success rate drops to 13.6%. Therefore, distributor bosses must promptly chase overdue payments after the due date. The longer the delay, the more disadvantageous it is, and the harder it is to recover the debt. This means collection time is crucial; immediately demand payment after the debt matures, and it is very important to cultivate good payment awareness in customers. Never let customers develop a habit of delaying. For customers overdue for too long who insist on not paying, consider whether continued cooperation will lead to more accumulation. Plan to control shipments, gradually reduce accounts receivable, and if necessary, use the method of cutting off supply to force customers to pay all outstanding amounts promptly.

Furthermore, to increase customers' willingness to pay proactively, distributors can formulate corresponding reward policies to encourage active repayment. One of the most effective methods is to use "material inducement" to achieve collection. A common practice is to set a settlement date; those who repay on time can receive a certain number of reward points or preferential sales policies, or make concessions on rebates; those who proactively repay within the specified time can receive material rewards or special offers in after-sales service, stimulating customers' enthusiasm for payment and accelerating the efficiency of capital recovery.

The above discusses the topic of distributor collection, with much said about how distributors should deal with customers. However, once a dispute arises and faces are broken, persisting will only make collection more difficult. Rather than expending energy on chasing accounts receivable, it is better to invest early in customer relationships. To borrow an old saying from the business world, "Never put customers on the opposite side." If distributors can establish strong customer relationships, the year-end collection efficiency will greatly improve.

5. Do Your Best to Help Customers Solve Problems and Establish Harmonious Customer Relationships

During the collection process, collectors need to consider using different collection methods for different customer types, handling flexibly. If some customers do not genuinely intend to default but are facing operational difficulties, poor product sales, or tied-up funds, the collector can use their knowledge to help analyze the market and plan promotional strategies, which may turn things around. Additionally, some customers cannot pay because their debtors have not repaid on time, and their accounts have no money. In such cases, if the collector can help "symbolically" recover some debts within their capability, it can also achieve good results. These proactive assistance measures from the customer's perspective will make indebted customers grateful and repay sooner.

For distributors to collect payments better, the premise is to provide customers with comprehensive, high-quality services, such as timely logistics and distribution, guidance and service in internal management and external operations, and gaining customer satisfaction and praise. Customers cooperate with distributors not only for good product quality but also for as much high-quality after-sales service as possible. After transactions, if distributors regularly follow up with customers, fully understand their satisfaction with products, promptly help solve problems, find various ways to serve customers, and enhance their satisfaction, customers will naturally be willing to pay proactively. By strengthening service concepts and awareness, distributors can leave customers with no "reason" to delay payment, thereby avoiding collection difficulties. Therefore, good customer relationships are also a strong guarantee for smooth settlement of payments.

**-END-**

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