We have the opportunity to speak with all kinds of businesses and potential clients when we are out and about. When we represent American Profit Recovery at trade shows and other exhibitions, we are speaking with entrepreneurs and others all day long. We love hearing about how business is going and how they’ve grown their organizations.

Some of these professionals have everything in order with their accounts receivables and have the systems to get paid. And some even have a collection agency they use for difficult accounts. A smart move.

But some we chat with could be doing far better in the area of basic accounting and getting paid for what they do.

Our team recently encountered a small business that had, to say the least, some cash flow issues. It was a small professional services firm that was run by one person and that professional was focused, almost entirely on just servicing clients. He was doing well by his clients and was very busy with his practice. But he had one major flaw.

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He had not sent out an invoice in eight months. Yes, 8 whole months.

After speaking with him for a while, we determined that he was so buried in the day to day of his business, and dealing with clients, that at the end of the day, he just could not deal with the mountain of invoices he had to send out. As the days and weeks went on, the thought of tackling this huge project became almost unbearable.

Putting off invoicing and collecting is a disaster waiting to happen.

Invoice on time

We know eight months is an extreme but as you just read, it does happen. We say it all the time here, but you have to bill your clients on time. What is on time? You have to choose but never more than 30 days after you provide service to that client. If you are in the trades such as a plumber, you might bill the day after service, but you cannot wait months to bill a customer. The other way to look at it is to make sure you are billing on a regular schedule. That “regular schedule” can be your choosing but make it happen at regular intervals.

Clients forget about you

If you received a bill from a company after eight or nine months, we bet you would question it. You would question what it was for and you would question if you paid that bill. One business we deal with told us that their trash removal was discontinued after a year of non-payment. Because the trash company never sent out a bill and then they shut that customer off. Sounds like poor record keeping if you ask us…

There are not many people out there that will pay for your services without being asked. After a couple of months, you are pretty much past history to that client unless if you an ongoing relationship with them.

Collecting on time

Alright so maybe you did invoice on time but still haven’t gotten paid. The hazards for your business of not implementing some type of collection activity quickly, can be even worse that not invoicing on time.

If a customer has shown the evidence that they are not going to pay you, waiting months and months to get more assertive in collecting that bill will only prove to be more difficult. The consumer has established in their mind that you have forgotten about them so why pay. It gets much more difficult to collect a debt when it’s aged to a certain point.

That’s why along with invoicing on time, you need to implement collection activity on time as well. That includes statements to remind your client that they have an outstanding balance on their account. It also involves getting on the phone and opening the lines of communication. Sending envelope after envelope with no results will require you to get on the phone.

When you do get on the phone, be nice, respectful and employ some tact when dealing with your customers. Use it as an opportunity to have a customer service type of call with them and bridge into the issue of non-payment. Your goals are to get paid, or at lease set up a payment plan and keep that customer after the delinquency.

Get help

As a business, you should never wait too long to get help. Especially when it comes to accounting, bookkeeping and getting paid on time. Not only do you risk not getting paid for your services, but you also risk meeting your own financial obligations in the form of paying your own bills, payroll and any taxes and fees owed to government agencies.

First, get a bookkeeper. If you cannot afford one on staff, hire one to button up your books. If you belong to a Chamber of Commerce, you’ll most likely find a good bookkeeper at a networking event or just stop by their office and ask for a recommendation. Or, just ask a business that you trust. There are plenty of options out there that you can afford.

Get help with a reputable collection agency. While you may hesitate to retain the services of a debt collection agency, finding the right one can save your business. Don’t wait until you’re completely frustrated because you may make a poor decision. Having a collection agency in place for when you need them, should be part of your overall accounts receivables program.

Don’t wait to send your late payers to your agency either. If you didn’t invoice your clients for eight months and then you drop all those off at your collection agency, you are risking an even longer process to getting paid. Another theme we always cover here is that the longer a bill goes unpaid, the harder it is to collect.

Need help getting caught up with your late-paying customers? Contact our experts today!

Published On: August 1st, 2019Categories: Advice for Businesses, Collection

Need to discuss your debt collection needs with APR?  Call (800) 711-0023 or use the form below to request more information.

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