If you are like most small business owners, you have a certain group of customers who are either late paying you, or have not paid you at all. It is very important that you isolate these customers and track them. Most bookkeeping software, QuickBooks for example, gives you the ability to identify customers who are not paying you, and can sort the list by its aging (that is, how long the debt has been outstanding).
Never be afraid to ask to be paid. If they owe you, they owe others as well and the squeaky wheel does get the grease. You should absolutely work to collect as much money as you can on your own, but you must do it in a timely manner, and set a limit on how long you will wait for your money. Generally, if a customer is ignoring you after 90 days, you have a problem, and should hire a collection agency or attorney to help you.
Here are more signs that it is time to hire a debt collector:
- You are having trouble paying your bills because your clients are not paying you.
- The number of customers going past 90 days is growing.
- You are spending too much time chasing payments and other areas of your business are suffering.
- You do not have the time or the staff to chase non-paying customers
- You do not wish to contact delinquent customers directly and would rather a third party do it for you.
- Customers have moved and left no forwarding address and you have no way to reach them.
- You hear of a significant event, such as a job loss, business failure, divorce, or move. It may too late to get a third party involved at this point, but better late than never!
So, the right time is the time that is right for you. The important thing to remember is that you must keep your aging receivables in focus, and get help when you need it.