A Guide to Successfully Collecting Money Owed to Your Business

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Write to the customer, stating the facts of the set including the complete name and address of both your company and the customer or the customer’s company; the total amount due; when the charges were accrued; any past-due or interest charges; and a date by which you expect payment. Include the steps that will be taken if payment is not received.

Query payment, pleasantly, but firmly, in writing, and include dated copies of all paperwork relating to the debt.

Keep copies of all correspondence.

Call all of the numbers you have until you can narrate with someone with the authority to talk to you about this bill, someone who can authorize its payment. Talk to the business owner if possible. Keep calling until you near that person.

Be firm, but friendly. Identify yourself as a collection’s agent acting on behalf of your company. State the facts briefly, including amount owed, invoice number(s), and date(s) of services or purchases. Then offer to select a payment by any means available to you over the phone or agree on a date to expect payment and the method of that payment.

If a full payment cannot be made, press for an amount and date or better yet, agree on a payment plan that will take care of the entire bill.

Continue to call until an agreement can be reached; state that as your procedure. Calling is the easiest and cheapest design to collect on a debt.

Always pause after each statement you make or question you ask. Give the customer a chance to answer. Listen and react to any opportunity to collect. Always assume that he or she will pay.

Repeat any map you’ve made and obtain verbal confirmation.

Send a follow-up letter reiterating the arrangements made or make a confirmation call a few days before the payment is to be made.

Document all discussions and all agreements made.

If the customer is ready to pay now or on some future date, arrange for a time and state when you can come by to “assume up a check.” Do not ask if you can advance by, state that you will be coming. Then, push for the best time, date and place. Call the day before to confirm pickup. Fridays and Saturdays are top-notch days for collection trips.

Follow up; always follow up. Do not be late or skip this appointment! You must be consistent if you are going to be successful. Make sure you have a receipt book or some way to acknowledge payment made.

When calls and attempts to arrange a check pickup fail, go and see them. Look them in the view. Talk to him or her in person. Go to their business, their home or wherever you can find them. Personal visits are a way to ramp up the pressure.

Drop by unannounced. Stay awhile if the person you need to talk to is “not in.” Be polite and smile at everyone, but be prepared to stay awhile. Buy something to sustain busy with: paperwork, a laptop, an iPod.

Keep stopping by at different times of the week and day until you collect to talk to the person you’re after.

Consistent and frequent follow-up calls and visits will usually result in payment. However, this is not always the case. Establish a series of steps to remove, in order of severity.

Deem using a collection agency. Consider contacting an attorney who could send a letter demanding payment and threatening legal action. Consider filing charges against those customers who write bad checks. Then do the research about just what this entails, how much it would cost, where the charges would be filed, etc.

Tips:

When dealing with a debtor always be firm but calm; stay within the law; and keep copies of all documents related to the debt and your efforts to collect it. Those documents may be used as evidence in court.

Do not allow yourself to be drawn into arguments or lengthy conversations. Do not threaten any legal or other collection action that you are not prepared to do.

Keep your emotions in check. Debtors may cry, yell, swear, hang up on you or show you the door. When they start telling you their sad fable, you need to be compassionate and at the same time, firm in offering possible solutions to get the debt paid.

Do not discuss your business’ “cash trudge problems” or any other problems that you may or may not be aware of with the customer. Support the discussion on topic, on the amount due and when it will be paid.

If the customer has a dispute about the service or product in expect and offers partial payment, decide in approach just how much “wiggle room” you have to negotiate the amount owed. Sometimes partial payment (the bird in the hand) is worth more than continued promises of payment in full (two in the bush).

Warnings:

Going to see the customer personally is fine and legal, as long as you’re just “stopping by to pick up a payment” and don’t cause a problem. There’s a fine line here between being a professional collections agent and “harassment.” Some customers might call the police if you press too hard.

Sources: Morebusiness.com, http://www.morebusiness.com, and Small Business Cash Flow, http://www.cashflowtruth.com