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Drive Forward with Better Collections for Your Business

Adam Groff

October 16, 2014

When it comes to a healthy small business, it's your responsibly to make sure you are paid in full with each and every transaction.

Delinquent payments and stagnant collections can turn your business upside down faster than you might think.

In order to help you avoid this past-due payment scenario, here are just a few ways your small business can steer toward better collections:

Avoiding Collections Issues

The last thing your small business wants to deal with is faulty and delinquent payments.

Besides, if your customers don't pay, then it reflects poorly on your business and your finances. Fortunately, there are ways to avoid collections issues altogether.

For starters, you should always check into the credit history of new customers. Poor credit could be a sign of financial delinquency.

In addition, you should also have a payment contract for each customer. This will ensure that if there are payment issues, you can take legal action.

Finally, you should never ignore a pending balance - no matter how small it is.

Unpaid balances have the tendency to snowball and turn into hefty sums over time. Making sure all balances are paid on time is the key to a financially sound business.

Car Dealership Example

As the following article shows, nowhere is debt collection more important than in the world of car financing. Car loans and collections are the way dealerships support themselves and, without an effective collections plan in place, many car dealerships would suffer to the point of financial ruin.

Your small business should use car dealerships as an example of how to stay on top of collections.

Treat each of your customers like they're leasing a car from you and it will help your business better track its collections. Sure, your customers probably don't owe you an amount of money equal to a car payment, but this mindset isn't a bad thing.

Invoice Tips

Your first line of defense with collections is properly and efficiently invoicing your customers. Invoices that don't fully explain all charges and are sent shortly before the payment due date oftentimes result in delayed payments.

Make sure your business's invoices are thorough and provide your customers with a balance break down as well as an explanation any miscellaneous charges.

In addition, give your customers plenty of notice about upcoming invoices. Email reminders are a great way to ensure customers are aware of future payments.

How to Handle Delinquent Payments

Collections are difficult to keep track of, especially when delinquent payments plague your business.

Unfortunately, payment delinquency and unpaid balances are an inevitability in the business world. Instead of letting faulty payments destroy your finances, there are steps you can take to make sure your customers pay.

Your small business can start by making collection calls to faulty customers.

Although this is a frustrating process, it's important to remain courteous with collection calls and record the conversation if possible. If collection calls don't work, you can turn the delinquent payment over to a professional collections agency that will ensure the debt is paid.

By keeping in mind the payment pointers above, your small business will improve its collections process.

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