One of the most common problems that affect small businesses is that their clients owe them money. When you have done the work, but individuals are being slow to pay you, you can get behind with bills and be short of money to invest in your business.
This is, understandably, an annoying situation -- you're being chased for debts that other men and women refuse to pay. There are, though, a number of ways to enhance your customers' payment speed.
Give Invoices a Deadline.
People will see your deadline and realize that you mean business -- they'll think "oh, I'd better deal with this" and you'll get your payment sooner rather than later. If you don't, a follow-up telephone call saying "I wonder if you knew that your invoice's due date was yesterday.."' will normally do the trick.
In some locations, the practice of putting due dates on your invoices might even entitle you to charge interest on money you are owed, or charge fees. Check your local laws.
You Could Try Debt Factoring.
Some companies have success with a technique referred to as 'debt factoring'. This is whenever you sell your invoices to a third party who focus on administration and collection, and they give you the funds for the invoice straightaway instead of you having to wait for the customer.
If you try this approach, though, you should consider the percentage of your invoices that the business is taking, and regardless of whether they're treating your clients the way you'd want them to be treated. It might be best to only sell invoices to debt factoring businesses when they haven't been paid by the due date, letting them act more like a collections agency.
Collections Agencies.
Of course, your last resort is to sell the debt to a collections agency. This can cost you around 10% of the debt. The collections agency will make an effort to intimidate your client into paying, ultimately taking them to court if needed, and they might try seizing the customer's assets.
Be Prepared to Settle.
Sooner or later, you might end up being owed money by a small business that's in financial trouble -you're one in a long list of creditors, as every little thing falls down around them.
In this situation, you should be prepared to settle with them for less than the original invoice price, or you risk getting nothing.
It's a bad circumstance to be in, but it is much better to give an individual a break and get some money rather than pushing them further towards bankruptcy and getting nothing.
Try corporate reorganization.
While you wait for your payment, a business restructure plan really should be in the works for you. Save your business by consulting a business expert on the positive aspects of companies restructuring.
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