Whether you own a Fortune 500 company or one of Georgia’s many cottage industries, getting your customers to pay on time is critical to your success. In the beginning, you may have felt comfortable with a more flexible payment policy, but you quickly learned that this arrangement can cost your business dearly and even endanger its chances of survival.
If you are dealing with the challenge of getting your customers to pay what they owe you, you are one of many business owners with the same struggle. You can take some steps to reduce the chances of this happening and utilize some assertive methods of collecting what you have earned.
Proactivity may prevent unpaid bills
From the moment you and your client agree on a transaction, you can address the topic of payment. While it may seem unpleasant to talk about money and collections, your client certainly expects that you are not doing the work or providing a product for free. Your clear explanation of your payment expectations and of the collections process may help you avoid having to put them into action.
Business advisors suggest that you train your sales staff to communicate your payment and collection policies to every customer. This consistency will help your customers take you seriously as well as provide a solid foundation if you should have to take any collection actions.
Protecting your business
Other steps you can take to reduce overdue payments include the following:
- Include credit information when your customer orders your product or service.
- Spell out your late fees, charges and collection practices in your contract.
- Collect a deposit on the work, especially for new customers.
- Suspend further work if your customer is behind on payments.
- Arrive in person to collect payment.
Successful companies establish a plan for pursuing overdue payments and diligently follow that plan. For example, you may send your first reminder after 30 days, a second reminder — including late fees — at the 60-day mark and a warning of imminent legal action after 90 days.
Of course, you must abide by the Fair Debt Collection Practices Act at all times, so it is critical to ensure that your employees understand this law. Additionally, any strong-arm tactics to collect a debt may reflect poorly on your company’s reputation. You may find that you would prefer to concentrate on keeping your business successful and allow a professional to handle your debt collection matters. Retaining the services of an attorney skilled in aggressive but appropriate collection practices may benefit you and your business.