Small Business Owner’s Guide to Collecting Past Due Quantities

For most small business owners, cash flow is always an issue. That is, there is often not a large stash of money sitting around to fund this month’s rent, payroll and expenditures. Instead, many small businesses are operate more on a month-to-month basis; payments from clients and customers are essential in a short period of time to keep the business enterprise afloat. This guide will help small business owners maintain the cash flowing.

The most important thing a small business owner can do is to ensure that the client or even customer’s bill is not in challenge in any way. If there is any doubt in regards to the legitimacy of the bill, these doubts will be used as a reason to not make prompt payment. Thus, if your business provides a product to the customer, make sure that you have the customer sign a receipt for the product stating that he provides received the product and agrees to pay the invoice in a specified period of time. Then provide a copy of this to the buyer. For a more service-related company, having the client sign off on estimates and acknowledging receipt of the service is essential.

Another key will be avoiding the problem of past due quantities is to offer the buyer a reason to pay quickly. A simple way to do this is to require payment upon delivery. Providing a way for immediate credit card payment is a great method to get your money quickly. Another way would be to offer a discount for early transaction; for example , a 2% discount to get payment within 15 days. Allow it to be easy to pay and pay quickly, and you will avoid a lot of hassles later on. Another incentive to pay on time may be the use of late fees.

As soon as a merchant account has become delinquent, even just a day time, make contact with the customer or business. Deliver another invoice, but this time printing it on yellow or pink paper. Enclose a friendly and professional note stating that the account is past due. Avoid harsh or demeaning language so as to not give the account an additional reason not to pay.
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Should you have a late fee policy that was clearly stated on the original invoice or agreement, add the late fee to the invoice and do not feel bad about doing so.

After a week or so, if payment has not been received, follow up with a phone call. Again, avoid being demanding or even belligerent; your goal is to gather your money and not to punish or even make the customer or client feel bad. Chances are, the client or customer is well aware of the past because of amount, and he is not paying for grounds. At this point, it’s important to figure out why.

If the overdue amount is from a business also it looks like it is struggling to survive, there are several things you can do. One strategy is to consider an secure partial payment instantly. This could be money or products or services from delinquent account. Something is always much better than nothing, and if you’re concerned about the viability of the account, it can be a time and stress saver to just accept and loss and move on. While you may threaten a small claims court suit or referring the account to collections, the reality is that collecting from the business or individual deeply indebted and going bankrupt is often a lot more trouble than it is worth, especially if the amount is relatively small.

If the business is doing OK and is just getting it’s own cash flow problems, exercise a payment plan immediately. Get a partial payment, even if it is just 10-20%, as a way to set the course for that customer or client to get on the road to full payment. If possible, secure post-dated checks for the remainder, even if they are spread out over several months. Be assertive, but , again, not harsh or demanding, as you might want to do business with this particular account again. That said, remember that the particular squeaky wheel is usually oiled initial, so it’s OK to be persistent.