At the crux of every successful business sits its accounts receivable department and its ability to effectively collect payment for services rendered or products delivered. Although some businesses focus on their largest debtors, thinking of the massive windfall they obtain when that client pays, an effective company must also focus on small debt collection. The small invoices with late payments add up to that desired windfall, so let’s explore the most efficient, effective methods of collecting these debts.
Don’t Go It Alone
Don’t try to handle collecting debts yourself, counsels Business News Daily (BND). When targeting small debt collections for maximum impact, take on a professional partner, such as an attorney specializing in that area and a collections agency. Using this method doesn’t typically take money out of your pocket because many collections agencies, like attorneys, take their pay from the settlement. According to the Better Business Bureau you may pay a fee outright to have an attorney draft a debt collection letter template for your company’s use.
Better Ways to Spot Missing Payments
Help your accounts receivable department develop cost-effective strategies for collecting small debts for your business. Start with spotting late invoices, something that a monthly or weekly review of all invoices helps you do. BND also suggests you review your invoice template. Your bills sent to customers should clearly state the invoice date and due date. These vital documents should also include a unique invoice number, your business address and that of the debtor, and an itemized list of products or services rendered with the cost of each and a total. Make your invoice a tool for enabling timely payment.
Invoicing Practices
Invoice twice per month instead of monthly. Your customers may get paid twice per month or monthly. By invoicing more frequently, you can place your business on the top of bills-to-pay pile. For those who own business-to-business (B2B) companies, move your invoicing to the top of the month. You’ll rank your business higher in other businesses’ top-of-the-month payment runs.
Integrate Cutting Edge Technology
Integrate the latest technology into your company’s invoicing and accounts receivable processes. Use a customer relationship management (CRM) solution that tracks comprehensive customer data. By doing so, you provide your accountant with important information about customer service contacts with the client and the client’s past payment record.
A CRM also integrates marketing information, so your CPA can quickly spot a loyal customer who may have signed up for a free trial of new services and missed the due date for continuing them or chosen not to do so. Sharing this information with all departments helps your employees provide better service and that leads us to another important factor in collecting money owed to your company – avoiding an adversarial relationship with your customers.
Maintaining Positive Customer Relationships
When you need to collect money owed to your business, it can make it tougher to maintain positive customer relationships during the collections process. Because you control the contact between your business and your customers, you can design processes that avoid adversarial scenarios. Choose any collections agency and attorney with whom you work carefully, investigating their reputation before contracting with them. Avoid strong-arm techniques, badgering phone calls or texts, and other unlikeable methods of contact.
Remain Ready to Escalate Your Methods
In some cases, the customer can’t or won’t pay their invoice. If an attorney’s letter didn’t work, take the individual or business to small claims court. The BBB suggests that if the amount owed to your company exceeds the amount for small claims court, your business uses the superior court. This does cost more money than small claims court, but it can help you recover money owed to your firm and set an example. For a less costly, yet still effective method, consider using arbitration. Most lawyers in the area of business law undergo effective arbitration training. Arbitration includes your lawyer, the customer’s lawyer, and an arbitrator, who functions like a judge.
Contact Massachusetts Debt Collection Attorneys Today
Don’t let your small unpaid invoices build up and cost your business its profits. The law firm of Goldberg and Oriel offers more than 50 years of combined collections experience. We treat each client with respect; we address client questions and concerns with immediacy. Our firm understands each client’s responsibilities and challenges in running their business. Let us help your business recover money your customers owe you. Contact us today.