Tips for Collecting Money in Today’s Economy

Most companies have witnessed first hand the signs of a sluggish economy. Business owners and managers will quickly take notice of slowing, late or negligent customer payments. Late payments can result in debt recovery problems. Businesses are dependant on their cash flows but are faced with a dilemma - how to collect money quickly without alienating the company's lifeline - their customers?

Have a clearly defined credit policy in place. Review it with each customer - both new and longstanding - and draw attention to the key points. Get current and accurate contact information on the person you are extending credit to. Sometimes a credit report may be necessary or advised before extended credit. Don't ignore overdue bills. Remember that the longer a bill goes past due, the less collectable it becomes. Plan action as soon as it runs 30 days. Re-bill promptly, as soon as the first bill is due. Consider requesting payment in full within 15 days rather than the traditional 30. Pick up the phone and call once a bill is overdue more than a month. A phone call is 10 times more effective than a letter. While this can be awkward for some business owners, it is simple and quite effective. Never apologize when you call or write remember that this is money owed to you. Simply ask the customer to write a check today for the full amount owed. Keep the tone friendly and sincere. There is no reason to be confrontational - even if the customer becomes hostile. Listen to what the customer is saying and be sympathetic. Your customer may also have trouble collecting money from his or her customers. Don't be vague - always ask for the full amount, not just a payment. If the customer cannot comply, insist on an exact amount, a check number, and the exact date when you can expect the partial payment. Never negotiate the amount, just the terms. If your customer will have a problem paying, offer a payment plan as a last resort. Insist that the first payment go in the mail today and be very clear when you expect to receive the entire amount. When all else has failed, seek a reputable collection firm, one that can provide references and has shown longevity in the debt collection field. The best would include in their collection efforts; mail notification, collection calls, credit reporting and a legal department to handle litigation.

Remember, the longer a bill goes unpaid the less likely that it will be collected. We suggest and have had the greatest success with accounts turned over to us between 90 and 120 days past due. It may seem difficult to turn accounts over to a collection firm but it does two things, it shows past due customers you are serious about getting paid and it also puts money collected back to work for you that you would not have.