How to Collect Overdue Bills

When times get tough, it's the small business owner who feels it first and feels it hard in the form of late pay, slow pay or no pay. Well, guess what? The tough times are here. If you can't get your money, you could be one of next quarter's bankruptcy numbers. So, here are some tips that will help make sure that you get the money you're owed.

Instructions

Difficulty: Moderate

1. Don't ignore overdue bills Do not ignore overdue bills. The longer a bill goes past due, the more uncollectible it becomes.
2. A phone call may be all it takes. Pick up the phone and call once a bill is overdue. A phone call is 10 times more effective than a letter.
3. Keep your cool. Be friendly. There is never reason to get into an argument, even if the customer becomes hostile. Backing that person into a corner will rarely get you paid. Odds are that this customer may have a number of overdue bills. Your goal is to get put on the top of the list, not the bottom.
4. Ask for the full amount, not just a payment. If a customer owes you $1,000 and you ask for part of it, that's the most you will get. Ask for the full $1,000. If the customer says you can expect at least some of the money, insist on an exact amount and an exact date when you can expect the check. Avoid vagueness.
5. Never negotiate amount, just terms, but only if it looks like your customer will have a problem paying. Insist that the first payment go in the mail today. For instance, if a customer cannot meet a $600 bill, you might stretch it out over three months as long as the first $200 arrives this week.
6. Take them to small claims if you keep getting stonewalled or feel as if you're being strung along. In many cases, debtors pay up before they go to court.
7. Contact a pre-collection letter service, or find a new attorney (one that is fresh out of law school and not all that expensive yet) who, for a small fee, will send out letters to deadbeats. It is amazing how an attorney's letterhead can often get results.

Tips & Warnings

• Don't worry about offending people who aren't afraid of offending you over money they owe you.
• When should you go to collections? Do this only when you are convinced that payment by any other means is a dead issue. Keep in mind that, it is sometimes best simply to write off a bad debt, especially one that looks like there is little hope of getting your money.
• The above advice won't guarantee that your collection problems are over. However, it should help speed payments and that will keep your cash flow flowing during these challenging times. Good luck.