You held up your end of the deal: providing excellent service or stellar products to another business. Months later, the invoice remains outstanding, while your bank account cries out for a fresh infusion of cash.
A lengthy and punishing recession has brought this issue to the forefront for many businesses. The offenders may or may not have a guilty conscience, but the fact remains, they’re using your money to manage their cash flow. Here are five ways to collect that bill:
1. Take action. People will often go to incredible lengths to avoid what they think may be an unpleasant or stressful interaction. This actually works in your favor. You don’t have to be a Snidely Whiplash to get what’s due – aim for polite persistence. If the business owner knows they can expect a call from you like clockwork, the client will be more likely to pony up the money.
2. Follow up. Most past-due accounts that age past 90 days do so because all they heard from your end was silence. Shake that money tree every two weeks, and eventually fruit will fall. Often, you will discover a past-due payment was a simple oversight, such as a lost check in the mail. However, you will never know unless you follow up (promptly) with your past due accounts.
3. Be proactive. Avoid aging accounts receivables by issuing invoices promptly, and make sure the client understands the payment terms. The time to do this is at the beginning of the supplier relationship.
4. Watch large accounts closely. When dealing with big corporations, realize these companies are likely good for the money but may take months to pay for services or products. As a result, they pose a greater risk to your cash flow. That may be an acceptable trade-off, if the company is a key account. Even so, it’s a good idea to follow news developments if it appears the company may undergo a merger, be sold, or even go out of business.
5. Spell out your payment terms. Have the client sign a document acknowledging that they understand what is expected. This will help to eliminate the most common excuses for slow payments.