6 minute read
Help Your Business What NOT to Do When You Don’t Get Paid
by Matt Moskowitz, American Profit Recovery
Most advice you get in your business is telling you things you should be doing to solve a particular issue. Do this, and you’ll get that. Or try this, and you’ll see new results. But what many might not do is tell you things you should NOT be doing in your business. And there are many.
One perfect example is around the topic of debt collections. You might have received advice over the years on how to collect on overdue accounts but there are quite a number of things you should NOT be doing when your customers don’t pay.
When customers don’t pay for your services on time, or at all, that can be a frustrating and troubling part of running a business of any size. Cash flow starts to suffer, and more and more resources begin to be put into trying to get your customers to pay. And those resources could be put to better use.
When a business tries internally to get customers to pay, there are certain parts of that process that should be avoided in order to create an effective plan in recovering your money. Here are a few things to avoid when trying to handle debt collections internally:
Don’t get frustrated.
Easier said than done! If you are in business, it’s not unusual that you are going to have customers and clients that do not pay on time, or in some cases, not pay at all. It is just another part of being in business and you and your team need to accept that fact. You need to try very hard not to get angry or frustrated when your customers do not pay. Is it upsetting? Yes, of course. However, it is up to you not to let this aggravating aspect of being in business get the better of you and your team. If you have customers, you will at one time or another, have some that don’t pay.
Do not harass those that owe you money.
Harassing the customers that have not paid you will get you nowhere. Not only that, but it is illegal. People will put up their guard when they feel they are being mistreated and your actions will backfire on you. You’ll wait even longer to get your hard-earned money. And a word about the law. If your customer can successfully argue that you have harassed them, you will be the one paying, not them. Be very careful in the way you treat your customers during collection activity.
Do not wait. Use your aging sheet, not your feelings!
You cannot wait months on end to get more assertive in your collection activity. Timing is everything when it comes to Accounts Receivable. You have to have a system in place and a time frame to start collection activity on unpaid invoices. You also cannot wait to bill your customers in the first place. Waiting in any area of your accounts receivables is a more likely way to not get paid. Cash flow quickly suffers and some customers can justify not paying you because you waited so long. When it comes to getting paid for what you do, be timely in all areas of your accounting.
Do not choose the wrong collection agency.
While the collection industry as a whole, has come a long way, not all collection agencies are the same when it comes to how they approach your customers. If you find out you have a regular need for a third-party collection agency, choose the
right one. Make sure they have ethics and values instilled in the entire company. That includes how they treat your customers, as well as how they treat their workforce. A scan of the collection agency website as well as an introductory call should give you a better idea of the mindset and the culture of the collection agency. Stay away from collection agencies that use words such as aggressive or demanding. That gives you a snapshot of how they might operate as well as the way they represent you.
When it comes to getting customers caught up in their obligations to you, in many cases, it’s what you do NOT do that can make all the difference in your cash flow.
Matt Moskowitz is one of four partners who founded American Profit Recovery in 2004. Since that time he has helped the company grow from a one office organization to an accounts receivables management firm with offices in Michigan and Massachusetts. APR specializes in the collection of third-party debt in industries such as medical/ dental, banking, trades, heating oil delivery, lawn care and other professional services. The firm serves approximately 3,500 clients. 1-800- 711-0023 The firm’s web address is http://www.americanprofit.net/
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