It is important to create an efficient collection cycle so you do not miss any over due account and collect the money successfully. Getting organised is very important. You need to find an efficient way to keep track of delinquent accounts. Collecting can get out of hand if you are not properly organised. Invest in quality accounting software so you can keep track of your accounts. You can use a simple spreadsheet if you work with a small number of accounts.
Keep track of overdue accounts by setting deadlines for payments. Quality accounting software can help you record payments and you can set up alerts when a client misses a deadline. Don’t hesitate to remind clients that they need to make a payment. Reminding clients a couple of days after they miss the payment only takes a few minutes and can significantly reduce the number of accounts that become past due.
You can get the money owed to you by requesting payments yourself, by hiring a lawyer to handle your past due accounts or by selling them to a collection agency. If you decide to handle collections yourself, the best thing to do is to send letters. Your first letters should be friendly reminders that the client owes you money. If you still do not receive a payment, send more threatening letters, for instance by mentioning that you will have to take legal action.
Hiring a lawyer is expensive but a good lawyer will collect the money owed to you. You need to calculate how much clients owe you and ask yourself if you can justify spending money on a lawyer to collect on past due accounts. If you cannot justify hiring a lawyer to collect the money owed to you, the best thing to do is to sell past due accounts to a collection agency. Collection agencies will give you a percentage of the money owed to you and your clients will then have to pay off their debt to the collection agency. You will not receive the totality of the money owed to you, but this is a good way of cutting your losses.
These tips will help you collect past due accounts. Do more research on the techniques you can legally use to collect from your clients so you do not get into trouble.