If you run a small business, you’ve probably encountered at least a few people that don’t want to pay their bills. Whatever the reason, some people aren’t able to pay bills right away. Maybe he or she is having financial troubles, lost a job or has some other extenuating circumstances. Whatever that may be, you still need to collect on that debt, as you’re running a business and you have bills to pay too. If you’re beginning to navigate the tricky waters of debt collection, here are a few tips to help you get started.
How to talk to customers
If you’re dealing with debt, many customers will immediately get defensive and have a lot of excuses. The worst thing you can do is harass them and threaten them. It will help immensely to keep your calls short and specific. If your customer wants to tell you about why he or she is having trouble making payments, this is the time to listen and be direct. Don’t get personal, but insist on a sense of urgency to make sure that payments happen.
Once you’ve established some rapport with your customer, there may be ways to get creative about types of payment. If there are genuine financial struggles, ask what kind of payments he or she can realistically afford. Try calling the day before a payment is due, text a reminder message or send a friendly email. As things worsen, you can begin sending letters that increase in urgency and intensity. You can even use a collections agency to send letters on your behalf as needed. You may be surprised at how many ways there are to work with debtors and those that collect debt.
If you still struggle to collect a debt, it’s time to turn that debt over to a collection agency. Most agencies will pay you 50 percent of whatever it recovers. Sure, you aren’t going to get paid in full, but usually getting half of that money is better than getting nothing at all. Try calling a few of the different collection agencies near you to find out what they offer and how they can help your small business. The Commercial Collection Agency Association is also a great resource about debt collection agencies and processes or procedures.
This article was written by Deborah Flomberg of Examiner.com for CBS Small Business Pulse.