Collection Tips for Small Businesses That Could Help Your Bottom Line
Companies lose money every year because some customers fail to pay their bills. Some losses from unpaid debts should be expected, but they should be kept to a minimum. If too many bills go unpaid it will certainly impact your bottom line. Small business may not always have the resources to devote to bill collection. Here are some collection tips for small businesses.
Review Financial Records on a Regular Basis
In order to collect from customers you need to know that they are behind in their payments. Waiting too long to take action can make it difficult or impossible to collect the money that is due your company. Designate time to review your company’s invoices. Create a spreadsheet that can be used to track receivables. Make a list of clients that are close to their due dates.
Determine Why the Invoice is Unpaid
Many times, customers only need a simple reminder that an invoice was not paid. Contact the client to find out why the invoice was not paid. In some cases, there may be a simple misunderstanding that can easily be resolved with a conversation. It is necessary to find out if a client is disputing an invoice, has forgotten to pay, or is unable to pay.
Set Up a Collection Procedure
Implement a collection procedure and designate debt collection to someone in your organization. Create a collection form letter that can be used to send to clients after the due date is past. Contact clients as a follow-up if they have not responded. A third attempt can include a request for payment by a specific date with the warning of legal action. Collection agencies may be useful for collecting old debts that are difficult to obtain.
Seek Legal Help for Collections
Some bad debt may need to be written off. However, when a client owes a large debt, it needs to be collected. If your attempts at collection have not gotten a result, the next step is to take legal action. Remember that it may not be cost-effective to handle all debts through legal means. An attorney will review your case and determine the options that are available to you. Your lawyer will send a formal letter to warn of pending legal action.
Small businesses can benefit from the help of a qualified attorney. Call the skilled legal team at Udall Shumway PLC to schedule a consultation.
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice regarding Collection Tips for Small Businesses, or any other litigation matters, please feel free to contact Roger C. Decker at 480.461.5343, log on to udallshumway.com, or contact an attorney in your area. Udall Shumway PLC is located in Mesa, Arizona and is a full service law firm. We assist Individuals, families, businesses, schools and municipalities in Mesa and the Phoenix/East Valley.