7 Tips for Collecting Money in Difficult Financial Times

Image details: Close-up of a man receiving dollars served by picapp.com

Collections Rule #1, as I heard it many years ago:  The longer the bill is unpaid, the less likely it is that it will be paid.  Here is dramatic visual proof of that rule in a recent Forbes article about collecting money in difficult financial times.

So what do you do to collect money?  Here are some practical tips:

1.  Start at the beginning.  At the beginning of the business relationship, put in writing your expectations of payment and have the customer sign the document.  Doctors include a financial responsibility statement in their new patient forms, and this is the kind of thing I’m talking about.

2.  Reinforce your expectations with every encounter and every communication, particularly with new customers.  Include reminders in every invoice/bill, or put a computer-generated note on every piece of paper that goes back and forth.

3.  Bill frequently.  Don’t wait until the end of the month.  Send out bills every couple of weeks, at most.  (Remember Rule #1).

4.  Plan your collections strategy to increase the level of urgency and insistence with each communication.  And require response.  For example:

• Communication #1 – Oops!  I’m sure you already sent this payment, but in case you didn’t….
• Communications #2 – We didn’t receive your payment and wondered if there’s a problem.
• Communications #3 – We did the work/we provided the product or service, now we need to get paid.
• Communications #4 – If we don’t receive payment by X date, we’ll submit your account to collections.

5. Offer payment terms to good customers.  This could make the difference between getting some of the money and having the person go bankrupt, leaving you with little or nothing.

6.  Keep in contact.  If the customer comes in or orders frequently, make sure you and your sales people continue to be friendly and pleasant.  If the person drops out of sight (often because they are embarrassed that they haven’t paid their bills), make sure your messages are received.  Use certified mail, or whatever will get you a signature.

7.  Finally, throughout the process, communicate, communicate, communicate.  The more you communicate and work on getting the customer to communicate, the better your chances of getting paid.

Do you have any other collections tips that have worked for you?