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3 Proven Steps To Collecting Overdue Accounts3 Proven Steps To Collecting Overdue Accounts
Collecting overdue accounts can be a daunting task — but sticking to the basics and emphasizing your own follow-though can make a very big difference.
The first step to collecting troublesome accounts is to bill effectively. Every invoice you send should be very clearly marked as an invoice, and should include a unique invoice number and the name of the person who authorized the purchase.
The invoice?should include the time period covered by the invoice and the date the invoice is due. While most clients will?not be happy if your invoice includes penalties for payments made within 90 days,?more people pay sooner if you include a small discount for payment within 15 or 30 days.? The discount offer should?be prominently displayed on your invoice.
You'll also find that staying in touch with your customers' accounts-payable people is a tremendous advantage. Even if your late-payers are very small businesses, knowing the bookkeeper is a big advantage. Keep the contact steady and friendly. Call after three days to be sure your invoice has been received.?If it hasn't been paid after 30 days, call and ask whether there is anything you can do to help speed the process along. And?if you still haven't been paid after 60 days, call again. Businesses short of cash are constantly making decisions about whom to pay now, and whom to?pay later. If you stay in close touch with the accounts-payable staff, you're much more likely to be in the "pay them now" group.
A final point, but a very important one: Stick to your?principles. As one billing consultant explains, "Once you get the reputation for bargaining over overdue debts, you'll never end a year with full payment on all your invoices. My approach since very early on has been that there is something sacred about the money I've billed for. I'll negotiate up-front on fees, and I'll even negotiate over fees for work in process if I have a client who's having hard times, but I will never, ever reduce the amount owed once the work is done and an invoice has gone out the door. I'll extend terms if I have to, but every dollar must get paid, period. People I work with know I'm serious about this, and they don't even ask anymore. Which is nice, because then I don't have to say 'no' so much. And I get what's owed to me."
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