A recent blog post by The Business Finance Store offers tips for small business owners who are having issues with clients not paying for goods and services provided. The post advises small business owners to follow five steps in order to best resolve the issue and collect the money owed.
- Face the problem head-on and begin collection efforts shortly after bills go past due, as it is less likely a debt will be paid the older it gets. Make contact with the debtor as soon as the bill becomes delinquent–let them know that their failure to pay has not gone unnoticed. The article suggests beginning with a phone call to remind the debtor of their bill in case they have simply forgotten about it. This also gives the debtor an opportunity to explain any legitimate reason for non-payment they may have.
- if this first call doesn’t get the job done, continue to call the debtor, taking notes of each phone call. If calls don’t get the job done, it may be time to send letters notifying them first that the bill is past due, and later (if needed) outlining steps that can be taken if the debt remains unpaid. Be sure to keep a record of all communications with the debtor.
- If the debt remains unpaid, there are two directions you can go in. The first is to offer a One-Time Reduction. If you think it is unlikely that the debtor will be able to pay you in full, you can offer a one-time deal for a lower amount.
- Your other option is to hire a collection agency. For small business owners a commercial collection agency that specializes in business-to-business collections, like The Kaplan Group, is likely the best choice. These agencies only work in business-to-business debt collection, so their debt collectors are well-trained in the laws and strategies relevant to that field of collection.
If none of these options work, your last option is to pursue legal action by taking the issue to a small claims court. Some collection agencies, like the Kaplan Group, have an in-house attorney and can take your case to court once all other options have been exhausted.