Getting Paid in a Bad Economy
When customers are suffering job loss, housing loss and the rising price of everything, small-business owners need to ensure they still get paid. In a down economy, should entrepreneurs be tougher when accounts become late or past due?
If you're thinking about being lenient with customers that are past due, be sure to consider that if someone owes you money, they probably owe others money too--whoever takes action first, will get paid first.
Here are a few tips that will help you get paid while the economy is suffering:
- Get paid at the time of service or if you offer terms, invoice customers on a regular basis and as soon as the work is complete, and make sure your invoices have the due date clearly visible.
- Change your payment terms, if your terms are net 60 or net 45 change them to net 30 or net 15. You can also offer an early payment discount to anyone who pays early, such as 1 or 2 percent off the bill if they pay within 10 days.
- Be proactive by calling clients with big accounts or accounts with large balances 10 days before the invoice is due to make sure they have the invoice, they have the correct address to send the check, there are no problems and that the bill is scheduled to be paid.
- When setting up payment plans, remember that you want as much as you can get as frequently as you can get it.
- If a business owes you money, visit them. If it is a restaurant, go there for lunch; if it is a printing company, get something printed or copied. Every time you walk in they will see you and it reminds them that they owe you money.
Collecting money is like cleaning the bathroom, no one likes to do it but it must get done. If you don't want to do it, hire someone to do it for you. Getting paid keeps cash flowing, so it is imperative to make sure you are getting paid, and getting paid according to the terms you set for your business.
Taking any or all of these steps will only help you to collect money in the short term but without making changes, such as having a credit policy, or checking credit before extending credit, you will be right back where you started next month.