Small business debt collection is too often and afterthought. In many small businesses, management, sales and customer service functions are not distinctively defined which could make it difficult to assign responsibilities and tasks. Sales is king, particularly in competitive fees, and new customers are often not assessed to determine if they ared creditworthy. Monitoring accounts receivable becomes too difficult, and “bean-counters” who advocate for caution are seen as the enemy of new business growth. Small business owners often tell me they are simply “too busy” growing and managing their business to worry about customers not paying. Unfortunately, the inattention often becomes a crisis when cash flow suffers. In these cases, panic ensues and the business will pull back credit lines, which of course, makes them less competitive. New hires or investments in technology or equipment become more difficult.
How do you juggle your many hats to include small business debt collection?
Small business debt collection involves a commitment to a process. Small business owners must promote a culture that emphasizes smart credit risk management as much as it emphasizes new business growth. It is team effort involving management, sales and customer service.
Small business debt collection can be successful in a business of any size.
Entrepreneurs who “do it all” can and must commit to spending a block of time on making sure they are getting paid on time, and following up on delinquent customers. If you are lucky enough to have a staff, you must design a process to monitor your accounts receivable and empower one person in your organization to manage it.
If you are going to extend credit to customers, you must do it in a smart way. Think like a bank. Gather information on your customers and use it to make a sound credit decision.
Customer credit arrangements must be in writing, in the form of a customer contract. If you do not have time for complex contract, simply outline (in writing) the details of your arrangements – when you expect payment and what happens if payments are not made on time – in an email. Ask customer to email back their consent, and you have a simple contract.
Small business debt collection does not have to complex. It merely needs to be a priority.