But, it’s a bigger headache for a small business. Just how does a small business collect its debts? Short answer: it takes a lot of effort!
|How Does a Small Business Collect Debts? : eAskme|
Who owes your small business?Debt is one inevitable cost of doing business. Generally, debtors are what you might expect:
- Deadbeats who just don’t pay
- Customers who pay when they feel like it
- Clients who have fallen on hard times
However, you want to salvage customers who pay when they can or who have significant financial troubles.
Money owed is doubly costly because the time and effort to collect adds expense. So, you want to work with customers who have a history of making partial, full, or irregular payments.
What to do, what to do?Take charge. You must stay on top of incoming and collectible monies. If you can, delegate the billing process to assure that bills and reminders go out with automated frequency. With or without help, implement trigger points that alert you to what’s coming and what’s not.
Act fast. Because debts don't get better with age, you must get in front of anything concerning. For example, if this debt is overdue for the second month running, flag it. If the monthly payment is short, flag it. Wait until the end of the month to learn about these, and you have already shortened your ability to act defensively.
Make a plan. Working alone or with help, you need a strategic plan. Triggers and flags may be in place, but you need a plan to follow-up. Do you call, mail, email, or what? You need a consistent and continuing process in place.
Stay friends. If collection puts a customer relationship at risk, you want to work smartly and methodically. For example, harassing a client with phone calls or personal confrontations can put you in harm’s way. Threats, even those justified by debt, risk legal consequences.
Script it. Prepare language for phone calls, letters, and emails. Write a script that is short and formal, impersonal and accurate in detail. Explain the obligation as a matter of fact and not as a threat. And, make a record of every step you take - every call, every note, every email.
Listen well. Because problem customer debtors are not all deadbeats, listen to their explanations. Perhaps you can work out a payment plan. Perhaps you can offer a discount or compromise price. Perhaps there is a tradeoff you would be willing to make to retain the customer’s future business.
And, if this doesn't work?How does a small business collect its debts when all else fails? Your business sense should indicate securing a collection agency. You want an agency to continue the process where you left off:
Demand Letters: Collection agencies know the language to use and the sequence to present. Their language is legally correct , f increasingly assertive.
Locate Deadbeats: Collection agencies use investigators to locate those long outstanding debtors who have eluded the business owner’s attempts to collect.
Court Action: Collection agencies provide direction and representation throughout any necessary litigation.
Collection agencies charge flat and contingency fees for their expertise. Ironically, it is in their continuing self-interest to serve you well and save you money.
Their expertise builds their reputation and saves yours. A collection agency expertise may very well be worth the money.
Stop Functioning as the Bank for Your ClientsAre you tired of dealing with clients that never pay on time? How about clients that take full advantage of your expert services and never pay for them?
Or maybe you recently sold your business and had to provide a mortgage note to the buyer in order to complete the sales transaction?
Whatever your situation might be, you’re never in a great position when businesses or companies owe you large sums of money that they intend to pay off on a month by month basis.
Maybe your situation has changed. Maybe you plan to get out of the business world entirely and you’d like to collect your money in full so that you can begin focusing on your retirement..
Or maybe you’re afraid that the buyer is going to default on his or her regular payments because we’re in a difficult economy and it’s tough to make money right now.
No matter what your reasoning, just know that you do not have to act like the bank forever. You do not have to carry this loan for the rest of your life.
Instead, you could always sell it to a company that buys business mortgage notes and other types of business notes.
According to Amerinote XChange, professional note buyers, “If you have tried to create and sell business notes, you likely already understand how challenging it can be.”
So retire in style without the headaches and hassles. Contact professional note buyers sooner rather than later. They’ll gladly take your business note off of your hands for a fair price.
Pat Sava is a super-connector with Towering SEO and Youth Noise NJ who helps businesses find their audience online through outreach, partnerships, and networking. He frequently writes about the latest advancements in digital marketing and focuses his efforts on developing customized blogger outreach plans depending on the industry and competition.