Running a successful small business is no small feat. A small brand owner has to wear many hats. They are the pioneer, a marketer, and customer services executives. Also, from time to time, they have to be a debt collector too. Though there are tons of third-party debt collection agencies. They can handle accounts receivables for a small business better, they tend to act first on their own. They must do this because of their relationship with the non-paying customer. If it is good, direct communication can solve the problem.
Still, if your business is suffering a cash crunch due to debtors and clients not paying on time, you can take some effective steps. It does include contacting a debt collection firm, but we will talk about it more below.
Let’s check out the steps that you can take:
Tip 1: Be calm and positive
It will not do you any good to get aggressive or angry. You need to remain calm and be positive, and figure out why your client or customer is not paying. The reason could be simple, like the client forgetting the payment. Or the fact that they have quite many vendors and they are paying one by one, so taking the time. If you start sending aggressive notices or accuse them of not paying without getting the whole story, it can lead to bad blood between you two.
Also, you can set automatic reminders on your online invoice so that the client knows if the amount goes beyond the last date. It will ensure no bad debts on either part says professionals at cedar financial. Check their profile here.
Tip 2: Set clear terms and expectations
It is best to set clear expectations and terms for your customers. It will ensure that you don’t have to face debtor or delinquency. Tell them in advance that you expect the payment by a specific date. You can give a day or two grace period, but after that, if they don’t pay, there will be consequences. Let them know about the late fee or starting the collection process if they go beyond 90 or 180 days.
Also, make sure that you follow through with this. If the client sees that you don’t do anything after a late-payment, they will continue to do so. So, set clear expectations, and always follow through with them.
Tip 3: Be cautious
Don’t wait till later to start your collection process. If the customer is late by two days, start the collection procedure. It is a known fact that if you delay your collection process, there is a 76% chance that recovering the debt will become difficult. You don’t have to involve a collection agency at this step. A simple email or a call reminding them about the payment is enough at first. A demand letter after that follows.
Tip 4: Communicate through multiple channel
It is not ideal for you to communicate with the debtor about a debt using a single channel. If you use email and think that it is enough, think again. A person gets tons of email, and your conversation will overlap, making it a task finding the right one. So, call them, or meet them in person if possible. It will help move things quicker.
Last Tip: Hire a professional
If all your methods are not yielding any positive results, it is time to hire experts. A debt collection firm, like Cedar financial, has the technique and knowledge to recover all types of outstanding amounts. From business debt to credit card debt to medical debt and more. These firms have expertise in recovering a debt. They do so without crossing any legal or ethical line. They know the laws, follow them, and ensure that you get the most amount from the original debt. When all else fails, they are the best bet. Also, hiring a collector is still more affordable than hiring a lawyer and filing for a lawsuit. So, going with the first choice is best.
In the end, you have to come up with a debt management plan for your business. You cannot afford delayed payment every month. You need to ensure that the customer knows the terms and pays on time, and if they don’t? They know that there will be consequences.
