Collecting Money Owed You

More than ever, this old Russian proverb rings true, “Don’t worry if you borrow, only if you lend.”  A sure sign that the economy is slowing down to a crawl is the horror stories of collecting payment—from personal loans to friends to payment  from companies.  This is painfully true with small businesses that depend on their relatively small client bases.  Most home-based businesses or even small-to-medium sized companies experience tales of “late payment” syndrome that could even stretch for months, due to the economic downturn.  Repeated calls to clients are never returned or the checks received from them come back with big bold letters saying, “no sufficient funds”.  Unfortunately, only a few small businesses have the cash cushion to survive client who turns deadbeat.

Employees are usually more up-to-date in payments.  For one, if they have cash emergencies, they could easily get fast cash loans to deal with their dues.  But this is not the case for business and companies.When it comes to collecting from clients, one can use many efficient methods.  There is also no need to hire a collections agency to do the dirty work, since this is also another added expense for the struggling, small business owner.Rather than severing the relationship with the client, there are many collection strategies that could be used.

One of the regular problems experienced by businesses during collection dates is the client ignores calls or emails.For small business owners and entrepreneurs to have a handle on the situation, they should make a background check regarding their clients.  The next step is to confirm if the client or customer did not go into hiding, or if the client is also a business, if it still exists.  One could make a confirmation in different ways: going online to see if the client’s website is being updated or send a certified letter to check if the client is receiving mail.

Receiving bad checks as payment is a very serious problem that businesses deal with often.   Business owners know too well that a check that bounces or is drawn on a closed account can wreck havoc to their own payables.  To avoid this bad situation from happening, small business owners should make billing calls to new clients before their first payments are up.This way, invoices can be checked and rechecked and the delivery is assured to be problem-free.

Small business owners and companies would experience these problems in collecting payments from clients and customers.  The message that should be emphasized to delinquent clients is this: “Collections is not easy but necessary.We mutually benefit from this business relationship.”