What’s the most frustrating aspect of running your business?
If you’ve been in business for a couple of years (or more) you don’t need me to tell you that waiting on checks and “chasing” customers who owe you money is a big pain in the you know what.
It’s frustrating, time consuming, and worse still costs you revenue that is rightfully yours.
So what can you do to collect outstanding payments?
Tips for collecting late payments
Recently I had lunch with a web developer friend of mine who admitted that last year he lost somewhere between 5 to 10k in revenue from people who signed a contract but never paid in full.
Even if you run a large company lost revenue, regardless of the amount, is intolerable.
So before you hire a collection agency (which is always a good idea given the regulatory environment we currently find ourselves in) here are some tips to prevent late payments in the first place:
- be careful when giving credit to customers
- accept credit cards and use recurring billing where possible
- explain transaction terms completely in your written contracts and agreements
- send statements and payment reminders to customers promptly
- send a series of regular reminders to delinquent customers
Now, will these notices and other actions prevent some people from paying you?
Of course not. In the case of my friend, however, he did reduce the time between invoicing and getting paid, and the amount of late payments did drop. He also started accepting credit cards and putting some of his customers on recurring billing, again eliminating the delay between sending an invoice and receiving a check in the mail.
It is generally not advisable to call your customers, unless you are very clear about the collection laws that apply to your state.
After all, one simple slip of the tongue could land you in a lawsuit.
And no, I’m not kidding.
Now, there may be times where you may not be able to find a customer that owes money on their account. If this happens using a collection agency can help because many of them can provide “skip tracing” services to you as well. Just be sure to ask about any associated fees for having them provide this service to you.
Finally, consider hiring a collection agency if all your other efforts fail.
Collection agencies can help you collect money that is owed to you provided you contact them early enough in the process. Their success rates are largely dependent on a number of factors, such as:
- specialty working in your industry/niche (especially true for medical collections)
- time frame
Which means that you are typically able to collect more revenue the sooner they contact your delinquent customers. Be sure to ask them about their methods for helping you collect, along with their success rate, fee structure, and the best time for getting involved in your billing process.
At the end of the day a collection agency will increase your chances of getting paid what is owed to you.
After all, it’s your money…
Find a debt collection agency today
To find a collections agency that specializes in helping business likes yours, simply request a free services quote from qualified and reputable companies.
Click the link and compare free collection agency quotes today.
If you prefer you can follow the link for our list of collection agencies and research providers for yourself that can help you get set up for your State or Metro area.
Either way the choice is yours.