You’re not alone. 69% of all small business owners are kept up at night with worries about cash flow. One of the leading concerns when it comes to cash flow is accounts receivable (money owed to business owners from customers, borrowers, etc.).
Tired of chasing clients for payments?
A debt collection agency can recover unpaid bills of small amounts by using their collection demands service.
Recovery of Large bills may require a combination of collection demands, calls and filing a legal suit.
Need a Collection Agency that serves Small Amounts too? Contact Us
If your business has a steadily growing receivables account – the average US small business’ receivables are over $53,000 – it can be difficult to focus on much else, especially when you require that money in order to continue managing your business.
You may feel locked between wanting not to be harsh on your owing customer while still wish desperately that they’d pay. Here are some debt collection tips for small businesses that we believe are the most effective in improving cash flow:
Remain Open-Minded and Understanding When Communicating With Debtors.
The first important thing you should do when dealing with your owing account holders is to always remain calm and together regardless of how worked up they may get over the situation. These people are still customers, which means relationships should remain important. If your customers get angry they can go home, however, as a direct reflection of your business, any negative situation can be detrimental to the image of your business. You’re also more likely to communicate effectively without taking offensive and defensive sides.
Take a Gradual Approach.
If the debt is rather fresh, start communication with only a simple follow-up email and a benefit of the doubt that your customers are only a little behind and will make a payment soon. If a couple of weeks have passed by without payment or response, you can give a more assertive nudge by making a phone call and/or sending a stationary letter in the mail. Ensure not to allow too much time to pass between communication attempts, as customers may believe that their debt has been “forgotten” and if you’ve forgotten then they might decide to forget as well.
Understand Your Rights and The Rights of Your Customers.
One of the first things you should do after deciding to exchange business on an account is to educate yourself on your rights as debtees as well as your customers’ rights as the debtors when the time comes to take the extra action in persuading customers to finally pay their overdue bills. The state of Maryland governs these rights under state and federal law. The last thing you want to do is cross a line that results in having government fines charged to your business, making cash flow even more scarce. Your accountant will know more about the receivable process and can help guide you on fees, contracts, and the types of accounts you should act on quicker than others.
Don’t Wait Too Long To Reach Out For Help.
The Statute of Limitations in Maryland that defines how long you have to take legal action on collections is 3 years. That’s three years from the last activity on the account. It’s possible for your business to miss out on the right to take a debtor to court if time runs out before you, a collections agency, or your lawyer are able to get in front of a judge. Although we believe that most people truly want to pay back their debts and are simply in a hard place, there are those who fall under the umbrella of never intending on making any effort to communicate or make payments. In situations such as these, a collection agency is more prepared to deal with hostile or MIA debtors and are more likely to make headway on payments.
Prevent The Chance of Delinquent Accounts by Running Credit Checks.
Your small business may be struggling to improve your cash flow due to overdue accounts now, but you can plan for a more predictable future by doing credit checks, especially over a certain amount. For $30 you can purchase a D&B report that will show you any other open or delinquent accounts as well as any liens or judgments against the individual. If you’re able to establish that the customer is likely to pay their debts or not, it can save you quite a bit of time and resources down the road.
Do Not Hesitate to Hire a Professional Debt Collection Agency.
There are several myths about collection agencies. Hiring a collection agency is possibly the best thing you can do to get back the lost money and stop spending too much time of your own employees who are neither trained for debt collection nor have any idea of laws pertaining to debt recovery. Need a Collection Agency? Contact us
Accounts receivable and outstanding debt may not play a huge factor in your daily business routine, however, you shouldn’t take a relaxed attitude when it comes to actively ensure your bills and invoices are sent promptly and are paid immediately.
To learn more about what you can be doing to lower your accounts receivable and boost your bottom line, reach out to us.