It’s not easy running a small business. There is so much to do in such little time that every minute and every dollar accounts for something. Therefore, it can be such a nightmare following up on customers who may have bought things from you on credit. For a growing small business, this is not an area you want to take lightly. Statistics indicate that several small companies in the US are owed an average of $84000. With this information in mind, it would be best to take proactive measures to avoid adding to the stats. Below are some tips.
- Issue prompt invoices with follow-up reminders
The moment products are credited from your business, and you have to issue the invoice right away. Apart from the physical bill on paper, you are responsible for sending a softcopy of the same invoice to the debtor.
Do not forget to ask the receiver to acknowledge receipt of the email you sent. This is for record purposes and mainly to avoid stories of never receiving your mail. Indeed, some debtors can take a rough spin on you when it’s time for payment. Usually, it is not advisable to wait for the payment period to elapse before sending demand reminders. Therefore, a week or two before the deadline, you can send follow-up reminders requesting for settlement of the bill.
This strategy will also allow you to keep your email language civil and with a ‘friendly tone.’ That will be a sharp contradiction to making rough demands when the deadline elapses and emotions are at play. After three different email reminders sent on separate days, you can call the debtor when there is no acknowledgment.
- Make your payment terms known from the start
Due to miscommunication or misunderstanding, there is the need to make the payment terms known from the get-go. In other words, make it easy for debtors to understand you right from the beginning. If you are issuing contracts and quotes, do well to state payment terms on the paper or the digital invoice. Before the credited items are taken, ensure a written agreement between the parties involved without giving room for ambiguity.
The payment terms usually include the amount owed, due date, method of payment, and bank account details. Others will indicate interest charges if a payment goes beyond the deadline. The last inclusion is usually done as a deterrent against late payments. Admittedly, even with all these precise details, some people will still go against these payment terms. This is when you need collection agency software to help you legally track your debtors and make them pay what they owe your business.
- Identify your struggling customers
With a little bit of observation, you can pick out from the lot those customers who are genuinely struggling to pay what they owe. Indeed, financial hardship is a reality and a fact of life. According to debt retrieval specialists, the first step is to get the client to admit to their financial problem, causing delayed payments. In some instances, they genuinely may have gone bankrupt and cannot pay up. At this stage, the best you can do is to halt any further supply to avoid compounding the debts already owed.
After which, draw up another payment plan that both parties can agree to. If that fails, you may resort to legal action to receive your payment. The court has the right to order a liquidation of your debtor’s assets to get you paid. Sometimes, emotions should be kept at bay to enable legal structures to take their course in the business world.
Leave a Reply