How to Do Credit & Collections From Your Home
Working as a freelancer or running a small business can be tough during the best of times, but when your clients don't settle their invoices it can seriously damage your cash flow and even threaten your business. Rather than retaining the services of a collections agency who will take a percentage of anything they manage to get from your client, strategically pursue the debt yourself from home.
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Instructions
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Send your client a past due notice as soon as the payment period stipulated on your invoice has expired. You can send this by email, but should always send a follow up hard copy via the postal service. Send a copy to accounts payable and a senior manager if you're dealing with a company. Include as many payment options as you can so your client has fewer excuses for delay. Provide your bank account details, your address and a PayPal email address. Always keep copies of any correspondence you send in case you need to take the matter to a small claims court.
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Call your client after seven days if they haven't responded to your letter. Always be polite, but firm on the phone and never resort to using profanities or raising your voice. If your contact at the company attempts to dismiss your concerns or says they haven't received your past due notice, confirm the details of where it should be sent and send another email and a hard copy. Tell the client that you will call immediately after you have sent another email to ensure it's been received safely.
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Call daily to inquire about your payment. If your client advises they have sent a check, allow three to four days for it to reach you. If they say they have made an electronic payment, allow two days for the funds to arrive. Although most electronic payments should reach your account instantaneously, there can sometimes be delays. PayPal payments should register as soon as they are made. Call again as soon as the grace period has passed. Some debt collections agencies call debtors multiple times in one day.
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Send a second past due notice 30 days after the first saying that you intend to take the matter to a small claims court if the invoice is not settled within a month. Again, send a copy by email and one through the post office.
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Continue with your daily calls. Try to stay on the phone for as long as possible outlining how long the debt has remained unpaid and the action you have taken so far to collect it. Mention the problem this non-payment is causing your business. Consider offering a 5 percent discount to settle the debt immediately. Although you'll be losing some money, settling will save you the time and hassle of dragging your client through a small claims court.
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Send a final notice with intention of court action if your client still hasn't paid in the time stipulated. State that you intend to go to court if the amount owed runs into tens of thousands of dollars. Your client may think you're bluffing if you say you're hiring an attorney over a much smaller amount.
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File a case at your local small claims court. The procedures for doing so vary from state to state, but be prepared to fill out many forms. If you've signed a contract, sent invoices in a timely fashion and there has been no dispute to date about the quality of the goods or services you delivered, you should be able to win your case.
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References
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