Get Paid

As the recession sets in, it may be getting tougher to get your clients to pay their bills. Here are 10 ways to collect.

By Cassie Dres

In today’s trying economy, many business owners may be having a tough time getting even their best clients to pay up. Companies struggling to keep up their cash flow are cracking down on these aging receivables, even hiring extra help to manage the collections process.

Here’s what some companies are doing to bring in the cash:

1. Be clear. Spell out expectations and payment terms from the beginning. Keep notes on whom you spoke to, when, and what was said or promised.

2. Call aggressively, but politely. Experts suggest explaining that cash flow is important to your business and that you can’t afford to carry this unpaid receivable any longer. Still, for the sake of client retention and referrals, it is crucial to not lose your temper, make threats or otherwise harass the client.

3. No answer? If phone calls aren’t working, personally visit whoever is in charge of paying you.

4. Extend a courtesy. Send a courier to pick up checks from localclients.

5. Charge it. Offer to allow payment by credit card. While you may have to pay a fee, at least you’re getting paid. Also put late payers on a payment plan with a credit card to offset the risk of receiving a bounced check.

6. Put the ball in their court. Pay careful attention to your accounts receivable. Let clients know that you are not holding payments for anyone. Make sure there is nothing else they need from you to make their payments on time.

7. Hit them where it hurts – their wallets. Impose a fee or charge 1 to 1.5 percent interest on overdue accounts. Try to work an explanation of the late policy into the original contract to avoid refusals to pay or clients’ hard feelings. On the flip side, consider offering a discount to clients who pay in advance.

8. Take them to court. For smaller debts, consider suing the client in small claims court. All states have small claims courts set up to resolve disputes involving relatively modest amounts of money. Amounts vary by state, but limits are typically between $2,000 and $7,500. If the client owes you more than the limit, you can take the matter to superior court or an arbitrator.

9. Turn the situation over to a collection agency. While you will be paying the company to settle the claim, this will allow you to recoup at least some of what you’re owed. Send a statement or a collection letter requesting payment of the invoice. Quicken Legal Business Pro provides 30-day, 60-day and 90-day collection letters for this purpose.

10. Blacklist them. If none of these other techniques work, create a list of the deadbeat clients so you will know to avoid their business in the future.