When a Debt Goes
by Wendy Priesnitz
you please advise with regard to a home business collecting money from customers
of my small, home-based business? It's not a pleasant job but perhaps you could provide some tips or
dialogue that would make this task a little simpler and smoother.
A: There are no magic bullets or silver-tongued dialogue that will make
customers pay their bills if they are unwilling or unable...no
matter how big or small your business is.
Prevention is a better strategy, but once the non-payment monster
has raised its ugly head, persistence pays off more than anything
terms of prevention, make sure you have a credit policy. Establish
ground rules for how payment must be made and stick to them. Spell
them out on your order form, contract, brochure and website. And
don't forget that credit is a privilege and you don't have to
grant it unless you're totally comfortable with your customers
intentions and financial situation. To this end, draw up a credit
application, have new clients fill it in, then follow up.
asking for payment up front, at least until credit is established.
Or on a contracted service, require monthly or phased payments,
which allows you to cut your losses by stopping work until payment
is received. Have the client initial this clause in your
let things get out of hand. Avoid allowing accounts to age past one
outstanding invoice. Customers with chronically aging credit
histories can be put on a COD or credit card only payment basis. But
don't tell them until after they've paid what they already owe you.
collecting a small business debt, always make personal contact. Call regularly and often;
don't be afraid of making a pest of yourself - that is exactly
what you want to be! Be firm but don't get belligerent. It is
often helpful to present options...post-dated checks, debiting
their credit card a certain amount each month, and so on.
that doesn't work, send a registered letter to let them know you
mean business. Give them a payment deadline, after which time you
will turn their account over to a lawyer or a collection agency, or
take them to small claims court.
not threaten those measures unless you are willing to follow
through. And you should be. Word travels and being an easy touch is
not a reputation you want to cultivate.
remember that persistence pays, whether you're selling your
product or service, or
collecting debts for your home business. And don't be so eager for business that you ignore
the fact that not all clients are desirable clients. Some may
actually end up costing you money if you are not careful.