Forums: Discussions for entrepreneurs and small business.

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Melanie Rembrandt
CEO, Rembrandt Communications®, LLC
Visit www.rembrandtwrites.com for valuable PR tips and SEO copywriting help!
Twitter: @RembrandtWrites

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Susan
Prints On Chocolate
http://www.Prints-On-Chocolate.com

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Melanie Rembrandt
CEO, Rembrandt Communications®, LLC
Visit www.rembrandtwrites.com for valuable PR tips and SEO copywriting help!
Twitter: @RembrandtWrites

Hire a collection agency that reports to the credit bureau`s. They`ll keep a portion of the money collected, but at least other vendor`s will know they don`t pay their bills.

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Rebecka Melson | Virtual Business Services | www.vbsofok.com

I was going to suggest hiring a collection agency too!

The trick to effective accounts receivables collection is to be persistent.  If you have a net 15 day invoice, you contact the slow payer on the 16th day, not the 45th day as so many do.  Don`t have to be nasty or disrespectful, just let them know (1) the invoice is due and (2) you haven`t forgotten about it.  You can even turn the collection call into a positive, like this:  "Just calling to make sure you received the product or service, you are satisfied, everything is hunky-dory etc.  It is?  Great!  What date should I note to receive  your check for our invoice then?

Here`s the trick I learned a long time ago:  Those who owe you money mentally classify their creditors in two ways:  One:  Those who are on top of their receivables from whom you may expect a phone call when the invoice is one day late; and two, those who they have successfully intimidated and they won`t hear a peep from them for weeks or months regarding the past due bill.  Those identified as #1 get their bill on the top of the bills payable stack; the 2`s get their past due invoices stashed at the bottom of the stack.  Obviously, top of the stack is better.

Here`s another idea:  If you know a merchant is habitually late, front-load the two or three months of interest into your price from day one.  Don`t think you`re going to add it on after-the-fact, that doesn`t work. 

Finally, get back into y our chosen field and get OUT of the banking business.  That is:  don`t offer credit to non or slow payers.  Get yourself a credit card processing merchant account and have your customers charge the bill.  If the customer wants to take his time financing the balance, that`s what the bank is for, not you.  I remember a wonderful sign from years back posted in a Shakey`s Pizza Restaurant:  "We made a deal with the bank.  They don`t sell pizzas.  We don`t cash checks "   Translation:  We`re in the pizza business, not the banking business.  This applies to you too.  Makes a lot of sense if you think about it.

AMSPCS
amspcs@juno.com
www.MerchantServices-help.com

I have decided they pay up front or no deal.  If that means less profit, and things take more time to move, fine.  Even if I were doing wholesale, I would require 70% up front and 30% within a certain time.  I would tell them that if it is not paid, the firm will take action to collect.  I refuse to run in circles trying to collect funds

Katherine--

I appreciate your frustration.  If the `pay up front or no deal` is for habitutal slow or no pay customers, than I think you`re right.  However, if you`re thinking of applying this policy to ALL your business, then I think you are making a mistake.  Kind of like amputating the entire arm to cure a hangnail--sure it`ll work, but if you give it some thought  you might come up with a smarter solution. 

I think a smarter way is to provide as many options as possible to pay up front.  You can arrange third party financing, accept checks, credit and debit cards of all types etc.  If you offer multiple options and the customer still refuses, then  you have a pretty good idea that the person is out to get something for nothing and stick  you.  But if you apply this policy to everyone, you`ll lose legit business from people who are just cash flow strapped (who isn`t these days) and would do gladly accept alternate payment options if you made them available.  Another thing  you could do is have a good attorney draw up an iron clad contract that makes it relatively easy and risk free to collect should you need to resort to alternate methods.  But don`t just turn your nose up to good business.  Think it over.

AMSPCS
amspcs@juno.com

I chose to outsource my back-office management to a company called MBO Partners, which handles contracts, invoicing and collections, so I`m fortunate that they collect from non-paying clients on my behalf!