Debt Collection Does Not Have to be Scary

Posted by Marilyn Miller on October 29, 2020  /   Posted in Uncategorized

Debt collection is one of those tasks that many small businesses owners avoid for a number of reasons.

Some people do not even realize that they have an issuing with aging receivables because they have procedures in place to monitor them. It is important to review accounts receivables at least monthly, and have a plan to follow up with delinquent customers. The longer a receivable is outstanding, the greater chance it will be difficult to recover.

Let’s face it, debt collection can be confrontational, and confrontation can be scary. However it does not have to be.

First, make sure that you are very clear of your expectations for payment. Clearly communicate the amount due, due date and accepted methods of payment. Make it easy for people to pay you by giving them several options. Know your customers. My dad, who is 97 pays all his bills with checks, while my 27 year old son uses Venmo and ApplePay. 

Once you have identified your delinquent customers, begin with a “gentle reminder” collection letter. You will be amazed how well a letter will work for you.

Your next step should be to email or call your customers. Email is less confrontational, but a phone call can be more effective. To make your phone call less difficult, script out what you are going to say. Begin your call by thanking the customer for choosing your business, and asking them if they are satisfied. Then talk about the money. Be ready and willing to work with them to set up a payment plan. Document the plan and make sure the customer agrees to it in writing. 

If, after several months, a customer is still not responding, do not hesitate to hire a collection agency. If you have made a good faith attempt to reach a customer, do not feel bad sending them to collections. You would not have provided the product or service if you knew you would not be paid for it. 

Make debt collection a regular part of your business activities. The more you do it, the less scary it will be.

Happy Halloween from United Obligations!

 

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