Financial problems, a preference for juggling payments and the willful avoidance of debt payment represent the primary reasons customers pay businesses late. No matter what the reason behind late payments, however, they cause significant problems for business owners who rely on cash flow for day-to-day operations. When customers fail to pay, business owners struggle to pay their own bills, add to their inventories, pay employees, maintain equipment and expand their companies. An effective plan for collecting debts can help keep a business healthy.
Ask for the money in person or over the phone. Keep this conversation polite and friendly. Sometimes a calm, friendly initial approach results in payment.
Send the party who owes you money an invoice, bill reminder or letter. While verbal requests sometimes get results, written requests can be harder to ignore. In addition, they create a paper trail that might help you prove your case if you have to seek help collecting the debt.
Set a firm deadline for payment. If you ask for payment but do not include a due date, this makes it easier for debtors to drag things out.
Follow up by phone about a week after sending your request in writing to make sure your request for payment was received. If your debtor has simply forgotten or overlooked your written notice, this might stimulate him to pay attention and pay up. Make reminder calls at least once per week.
Write a demand letter in which you firmly state how much the recipient owes you, why you believe the recipient owes you the money and the deadline by which you need payment. Mention your next step in the event that the recipient fails to pay by the deadline, such as seeking a resolution in small claims court or contacting a collections agency.
Move forward with your plans to collect the debt if the debtor fails to repay by the deadline in your demand letter. File your case with small claims court or contact a collections agency to take over for you.