If you have been a business owner for quite sometime now, chances are, one of the things that have given you headache would be ensuring the timely collection of payments. Sure, there would be customers who would make the payment in advance. There would even be those who make the payment just in the nick of time. Along with these people, however, come those customers who take time before they can make the payment. Worse, there are also those customers who would rather skin town than face their responsibilities.
Writing off debts is something that most business owners have to do at one point in their business. However, having to do this on a regular basis can, later on, have a big impact on the company’s finances. In most cases, having a solid credit policy in place can solve most of your problems. There are, unfortunately, some instances when this would not be enough. In those situations, you have to make a more proactive approach.
First thing’s first. Way before your client’s due date, make sure that you send them a regular friendly reminder about when their due date is. If possible, indicate what the repercussion of late payments would be. It is also a good idea to indicate in your invoices the same reminder so that your client is duly aware of what could happen to their account.
If your client’s account is past due, instead of sending an email, pick up the phone and give him or her a call. This works better as it is harder to ignore a call. If you have his or her personal line, that would make things easier. Now, while it can be easier to be aggressive, that is not the proper way to do things. Remember that honey attracts more flies than vinegar. That being the case, you have to let your customer know that you are willing to work a payment plan with them, one that would not put much dent on their budget.
Now, as long as your client is still holding off on the payment, do not forget to send them past-due notices and letters. If, say, after a month or two they still have not settled their account, you might want to consider getting the services of a debt collection agency.
Debt collection agencies, as the name implies, can be depended upon to run after your debtors and make sure that they are able to make payment. In most cases, a debt collection agency would have its own niche specialty so, if ever you would be hiring one, make sure that you go after those that have had handled cases similar to your business. While these agencies would not be able to collect the full amount due you, they would, at least, still be able to get a portion of your money. Keep in mind, though, that getting the services of a collection agency can cost you money so make sure that you have exhausted all other avenues before getting in touch with them.