As a business owner, there is nothing more disheartening and frustrating than when you provide a service or product to a customer only to have them not pay. Running a business costs you money and if you don’t collect on overdue invoices, you can quickly see your cash flow slow to a trickle. As tempting as it is to continue to call your customer and demand they pay, there are rules and regulations in place that protect their rights over an owned debt. If you are finding yourself with an ever growing “past due” invoice list, it’s time to put into place a few processes that’ll help you recover your past due debt, as well as, prevent it in the future:

Avoid Bad Debt

While you can’t control every person or companies accounting practices, you can and should put billing practices in place that could help deter overdue and unpaid invoices. Be sure to put a clear due date on every bill you send – due on receipt leaves it very open ended. Have a friendly follow up procedure for reminding your customers as their bills become due.

Communicate with your Debtors

If an invoice has moved past it’s due date, grace period, and it’s becoming clear that payment is not on it’s way, do your best to communicate with your customers. By being understanding and offering to find a solution that works for both parties, you allow them to feel more comfortable and communicate back to you why exactly they haven’t sent payment.

Be sure to document every contact you’ve made with your customer, whether by mail, email or phone.

Hire a professional debt collection service

If all else fails, hire a professional debt collection service to assist you in collecting on delinquent accounts. Each state has their own set of rules, regulations and legislature on what is and is not allowed when it comes to collection on debt. It’s better for you to hire a service that is familiar and follows these regulations rather than finding yourself accidentally violating your customers’ rights under the debt collection law and in legal trouble for it.

Thankfully, the majority of your customers and clients are quick to pay their invoices on time and without hassle. But, as your company continues to expand, you’ll undoubtedly find yourself in the position of having to collect on an unpaid debt. By setting up a few best billing practices, you can attempt to deter the situation from happening at all. If even against all your attempts, the bill remains unpaid, contact the accounting department or client personally to see if you can settle the payment together. If these steps are unsuccessful, protect yourself by hiring a professional debt collection service to assist you.

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