June 7, 2017
3 Tips to Make Small Business Debt Collection Easier
As a small business owner, you know how difficult it can be to collect on outstanding invoices. You want to give people the benefit of the doubt and some help, but you aren’t a bank. And you shouldn’t be treated like one.
Below are some tips you can use to make small business debt collection easier for yourself. Save yourself the headache later by taking care of your business today.
1 – Have your credit terms well thought out and laid out in plain English
Before you even enter into an agreement with a client, be sure you have a detailed and well-thought out overview of your credit terms in place. Write this in plain English so that when you are reviewing it with the client, there are no questions.
Also, be sure you ask to ascertain whether or not the client understands. If they don’t appear to, then ensure you take the time to walk through the credit terms again. You want your client to completely understand their requirements and the debt collection process if they do not pay right away.
2 – Have a process in place for when people are behind on payment
Just as important as having your terms laid out from the start is the process you use to contact late payers. This can be as simple as a schedule for phone calls, mailed invoices, and finally debt collection letters you use once their account becomes delinquent.
An example of a debt collection process for delinquent accounts could be:
0-30 Days Past Due – Customer Service Phone Call to follow up a mailed invoice, 5-7 days prior to due date.
35-40 Days Past Due – Reminder call and letter detailing the call
45-50 Days Past Due – First Debt Collection Letter + Reminder Call
55-60 Days Past Due – Second Debt Collection Letter + Reminder Call
65-70 Days Past Due – Third Debt Collection Letter + Reminder Call
75+ Days Past Due – Refer to Collection Agency
3 – Use a series of legal debt collection letters prior to using a debt collection agency
This use of legal, small business debt collection letters will help you to enforce your requirement of payment, without having to resort to contacting a debt collection agency. It also provides you with an authoritative presence, without being overly harsh. It will help you get your point across (you aren’t a bank and payment is due) in a straightforward and clear manner.
If you already have a process in place for your small business debt collection but are looking for a template of legal letters, please download our free small business debt collection letters.