Customers who try to skip out on a payment can really hit your bottom line and if you happen to accumulate unpaid invoices, you’ll feel it. The sad truth is, the longer customers take to pay, the less likely you are to receive payment. Even a strong customer-vetting system can leave you saying, “Show me the money!” Develop an action plan and receive your payments in a reasonable amount of time.
Sometimes delinquent customers will pay if they are offered a discount on the total payment. You may have to sacrifice 10 to 25 percent off to receive anything at all. Consider giving discounts to clients who pay off the total amount immediately. You might also consider giving discounts for a credit card payment. If you are successful collecting, note the account to show that the customer must pay prior to further services or sales.
Create a Plan
Even good people get behind on their bills. When valued customers appear as if they are getting behind on their invoices, offer a payment plan. Communication and cooperation could bring in your payments. You may have to spread out payments over a significant amount of time like 6 months to a year.
Go to Court
Taking a client to court is not the first option but it may be necessary. Depending on the laws in your state, you could take your collection attempt to small claims court. Keeping good records is crucial. In most cases, you can represent yourself but you should hire an attorney to deliver official paperwork like a summons.
Hire a Pro
When you aren’t getting results, hire a professional collection service. These companies will collect debts on your behalf for a fee or percentage of the monies collected. Professional collection agencies track, contact and collect debts for small businesses. They will send letters and make phone calls to reach your delinquent clients.
Let It Go
If you don’t see any results from your efforts, you may have to let it go. Opt for the write off but keep good records; at least you’ll get some tax credit. Don’t extend services to customers who haven’t paid previous debts.
As a business owner, I know how tough it is coping with collecting payments but you have to be vigilant. Stay on top of delinquent accounts and set limits on how long you are willing to wait for a payment before discontinuing services.