Small business continuously struggle and cannot stay afloat if they are not paid. That is the biggest challenged for their survival. In addition, sometime you just cannot cope regularly with your payments because of continuous cash flow problem. All of these require preparation and continuous efforts. You have to develop a continuous communications with all of your vendors in this regard and let them know the time when you can pay them by sending them letters and should make every effort to send them money at the promised time. It is the effective communicating and working with financially troubled clients as they make their way through a rough patch, you may end up with devoted customers for life.
Let us analyze this as late-paying customers usually fall into three categories:
- Customers who want to pay but, because of many financial problems, cannot do it on time. They are good people but unfortunate presently and behind on their payments.
- Customers who prefer to delay or find excuse not to pay. These habitual folks just do not like to pay.
- Customers who will do whatever possible to avoid any payment. These are chronic people and like to play with someone else’s money.
You can be tactful for the first two categories, devise some plan, and develop some scenarios. These can be worked and small business can be able to manage these debts by at least asking them to adhere to some kinds of payment plans. The last one is chronic and just cannot be tamed. For them, you need to devise some hard-core tactics.
How to do some decent collection activities. Here are some more tips:
- Harassment is not the answer. Let your vendors know that you have a small business and a cash supply is essential for your success. Initially, a polite reminder should be enough, which gradually should change to some rough and hard tactics. Again, an attorney’s involvement should be desirable at this stage.
- Try to analyze the whole picture. No need for lengthy calls as you can keep them short. Stay calm and no need to be personal.
- Appreciate the financial hardship. In case of genuine hardship, offer your vendors some genuine hardship alternatives. Consider extending time. Consider extending short payments. Consider extending barter system. You can also call the day before the next scheduled payment due to make sure the customer plans to respect the agreement. A polite reminder should be enough.
- Write polite demand letters. Along with phone calls, send a series of letters that escalate in intensity. Save copies of all correspondence with the customer and keep notes of all telephone conversations.
- Use an attorney. You can pay a collection agency a fixed fee to write a series of letters on your behalf.
- Offer a one-time deep discount. Offer a deep discount coupled with timely payments.
- Limited, deep discount to resolve the matter. You can finalize this with