You have worked hard to make your small business a success. The sacrifices of time and money were worth it because your business now has a positive reputation in Georgia and a growing client base. Still, you have financial obligations: bills, debts, payroll, insurance, materials, etc. You depend on your customers to pay their bills on time. When they don’t, it becomes a hardship.
Even when economic times are good, if customers don’t pay, times can get hard quickly. Every client is important to a small business owner, and having to decide to drop a customer – or sue for non-payment – can be stressful. Having a plan in place will offer alternate courses of action that may help you avoid a nasty battle to get your money.
Crossing all your t’s
Examining your invoice is a good starting point. A vendor or client may use an incomplete or inadequate invoice as an excuse to avoid paying you. Consider these items:
- Do you need to include a purchase order number?
- Does your customer require any additional information that your invoice doesn’t provide?
- Is the format of your invoice (hard copy, electronic submission, PDF, etc.) acceptable to your customer?
- Does your client require you to complete a new vendor form?
It’s also important to note the terms of payment on the client’s contract. If a customer’s policy is to submit payment in 90 days, and you prefer to be paid in 30 days, there may be room for negotiation. Sometimes it is a matter of clicking a different option, and to maintain a business relationship with you, a customer may be willing to accommodate your request for modification.
Collecting money customers owe you
If, after having all these things in place, your customer continues to delay payment, you may wish to consider updating your payment options. Electronic transfer is faster and more reliable than sending a check through the mail. You may also think about including Paypal or credit cards as options. These include a small fee, but the guarantee of fast payment may justify the cost.
Some small business owners find success in offering a discount to customers who pay their debt immediately with cash or cashier’s check. Often, this method motivates a delinquent customer to come up with the money quickly. You may then wish to make it your policy to extend no more credit to those customers. In fact, there may be times when you might have to take a hard look at some customers and decide if it is worth holding on, especially if getting money from them is a consistent struggle.
Some customers still won’t pay
When accounts receivable remain unpaid, your business suffers. You may reach the point where you have no choice but to take action against a client who owes you money. After offering your client every alternative, your next resort may be to contact an attorney.
Having an attorney opens even more options for you to collect on the debt. Not only will your attorney work to get your money for you, he or she can offer counseling that will help your business improve its procedures for billing and receiving. This will allow you to maintain your integrity and help your small business to thrive.