Collections Made Easier

Are customers slow in paying you or not paying at all? Here are some ways to collect more of what is owed to you.

-A collection phone call is 10 times more productive than another billing statement.

-Call frequently. Calling once or twice a week is not harassment and is far more effective than monthly calls or invoices.

-When you call, always ask for payment in full, sent today. If you have to negotiate, it's best to start from the strongest position.

-If your customer is vague and offers to send "a payment" or "something on the account," tell the customer, "That's great, but we need to have a specific amount on a specific date." Then, ask for half now and the balance in two weeks.

-If you agree to accept multiple payments, ask for postdated checks to be sent now, along with the first check.

-Offer a discount for PIF--payment in full--today.

-When you get a promise to pay, confirm the amount and when it will be sent. Tell the customer you will mark it on the calendar three days from that date to let him or her know you'll be looking for the check.

-If you get no cooperation, say that you hate to turn the account over to collections, but you may have no choice. That tends to focus your debtor's mind, more clearly.

--by Leonard Sklar, collections consultant and author of The Check is Not in the Mail (Baroque, 1991)

Surving a Meltdown

IN AN ECONOMIC SLOWDOWN, small-business owners become more vulnerable, because they often do not have a great deal of capital to carry them through tough times. Susan Carlisle, a certified public accountant (http://www.carlislecpa.com/) from Woodland Hills, California, says “On the
other hand, small businesses are well positioned to become lean and mean. They can respond quickly to the changing marketplace.” She offers these tips.

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1. Watch inventory and supplies turnover. If sales are slowing down, order in quantities that offer a discount.

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2. Revisit accounts receivables regularly and send out bills more frequently. Consider giving bigger discounts for prepayments, CODs and cash. Offer to take credit cards instead of waiting for checks in the mail—especially to those customers who tend to need second reminders to pay.
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3. Stay in contact with customers to make sure they’ll still be in business when your invoice arrives. You should be staying in contact with them anyway. Right?

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4. On the selling side, customers purchase more basic items and cut back on discretionary items. If you sell only discretionary products, emphasize value.

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5. Keep well-trained, good employees through the downturn. If you must cut back, offer to cut hours across the board instead of firing good people, as this will keep employees’ spirits up. It will also show that you care about your people.

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6. Look at your fringe benefits. You may have to cut back on some of these.

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7. Bring your bookkeeping up to date. Use it to budget for the year ahead.

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8. Visit your CPA to do a tax projection now instead of waiting until April. She or he may give you some tax-saving ideas and change your estimated
payment schedule based on a projection for this year and the next.