Getting paid is the only way that your business can stay afloat,but collecting business debt can be harder than you imagine. This means knowing how to collect the money you are owed is a vital skill to if you want success. The issue is that many people go about this in the wrong way. If you do not know how to collect the money you are owed the right way,you could alienate your customers and negatively impact your business.
The start of the debt collection process will be the normal invoicing to your customer. The invoice should have information about the payment period which is often 30 days. This should be agreed before you do any work with a client,your the payment terms needing to be included on the invoice.
You will not be able to get payment of the debt if you have not provided a good invoice. The invoice should have information about the payment terms,but it should also have a detailed breakdown of what was provided. This can be very useful in the long run.
Chase The Payment
If you have not been paid on time,you have to start chasing the customer. The way that you do this will depend on how you run your company. Some people chase payment via email while others will call the client. Regardless of the method used,you need to be polite when you chase them about the payment.
You should never begin with an aggressive approach. This will just make the customer less likely to pay,because you have been unnecessarily nasty to them. The emails and calls should also be kept short and spaced correctly.
Sending The Final Demand
If you have not been paid for a long period of time,you will eventually have to send a final demand. This is the last piece of communication before you take legal action. The notice states that the customer has until a set time to pay before you start pursuing legal action to claim the money owed.
In many instances,a final notice will be enough to get you your money. However,if you are still not being paid and there has been no clear reason for this,you will have to take legal action. It is vital to note that before this stage is reached,you should place any further work for the client on hold and not provide them with further work or services.
Taking Legal Action
There are two options when it comes to legal action and the one you choose is based on the amount due. The first option is to go through the small claims court. This method allows you to mediate with the customer and reach a conclusion that you are both happy with. The resolution will normally be the customer paying the debt along with interest and fees such as court costs.
The other method is to work with a debt collection company. This can take place after the small claims court as well if the customer is not keeping to the legal decision. The company will work as a liaison and will help enforce the court decision.
There are a few steps that you can take to collect your business debt. Chasing the debt politely is the initial step and you should only send a final notice after a prolonged period of time. Legal action is the final step to take and could lead to insolvency proceedings.
For more information please see www.laneandcosolicitors.com