Before you try to collect, take into account the amount of the bill and the cost involved in collecting it. First, you need to calculate what your in-house collection steps cost. These include issuing past-due notices and making phone calls or personal visits. Then consider your margins and what your actual losses would be if you wrote off the invoice.
Now you can set some general guidelines. For instance, balances under a certain amount will get a set number of calls and letters before they're written off. Higher balances may merit stronger efforts, including using an outside service to collect.
Excerpted from Get Smart: 365 Tips To Boost Your Entrepreneurial IQ