Creditors have better memories than debtors.”  – Benjamin Franklin

Every small business owner hates bad debt collection. Consider this though: you already have a good deal of money on your books that you can use to grow your business. You just need a plan to get it.

I have received three telemarketing calls today from companies wanting to loan my business money. Both traditional and non-traditional lending sources are abundant. Entrepreneur Magazine is pitching crowdsourcing as a good way to finance your business. The Small Business Administration provides a helpful guide for small business finance. Small regional banks want to lend money to local businesses to invest in their communities. However, nowhere does anyone suggest that going after money owed is a great way to help your cash flow and finance the growth of your business.

Raising capital and borrowing are often good tools, but are you willing to give away a bit of your business (crowdsourcing) or pay interest (borrowing)? What about the money already owed to you for services or products you have already delivered? Wouldn’t it make sense to start with the money you have already earned?

Do you have a plan for bad debt collection? You should immediately put an in-house procedure to track past due accounts. Draft a good collection letter. If you hire a collection agency, the fees you will pay are likely much less than you would have to pay in interest on a loan. There are also ways that you can reduce the amount of bad debt in your business.

A focused and consistent effort at bad debt collection will pay off for you. In some cases you may even find that you can convert delinquent customers into good paying customers by offering a small discount or a payment plan.

So before you borrow, ask yourself, “What’s in my receivables”?