Support Essay

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Collecting on Overdue Accounts Many small business owners work their fingers to the bone to sell their products. But that approach won´t get your business anywhere if your customers don´t pay. Here are some effective ways to get paid by delinquent customers: • Maintain an accurate accounts receivable aging report. The report should include each customer´s name, the amount owed and how late the payment is. Update the report at least once a month. Most accounting and billing software packages can produce aging schedules automatically. • Call as soon as a customer is late with a payment. Even a small delay reduces the chance you´ll get the money. And be persistent. Keep calling if your first call doesn´t produce payment. Customers in financial trouble pay bills from the most persistent companies first. • Don´t give your delinquent customers an excuse for not paying. For example, don´t ask if the bill has arrived. • Send a letter clearly stating the consequences of further delays in payment. Many delinquent customers are more inclined to pay if they know failure to do so will hurt their credit rating, result in interest charges or cause you to refer their account to a collection agency or lawyer. • Consider hiring a collection agency. Such companies are typically paid on commission -- usually around one-third of the collected amount, though rates vary. (Some collection agencies charge a flat fee.) Only use collection agencies to get payments from customers you no longer value -- collection agencies aren´t known for their tact. • Use lawyers as a last resort. Hiring a lawyer is the most effective, but also the most expensive way to collect debts. Reserve this option as a last resort. Like collection agencies, lawyers usually work on commission. Don´t pay them by the hour, except for very limited projects such as writing a letter or two. • Hire a

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