Do I Send My Client to Collections?
The collections process for small businesses is a major resource drainer. It takes time, effort, and consistency to get paid on-time. When clients are waiting longer than a few days to pay open invoices, it will hurt your company’s cash flow and growth. Delinquency averages around 7 to 9 days past the payment due date. Depending on your established credit terms and your own payments to make, this could be detrimental. Should your business hire a lawyer or collections agency to recover the debt? What steps can your small business take to collect on unpaid and overdue invoices?
Preventing the Collections Process
The obvious advice for any small business is to not do business with other companies that will be unable to fulfill their payment on time. This practice would require frequent check-ups on a client’s credit activity, communication, or a longstanding relationship with a client. While it sounds great to know which clients may be struggling to make payments and which clients will pay your business on schedule, it would also eat into your time and resources. It can be difficult to tell which clients have healthy cash flow and which clients may be pressed for receiving payments of their own. This is where a third party receivables management company would provide a needed service to your business.
What to do when a client cannot pay:
Whether through phone, email, or mail, get in contact with the client. Best case scenario: it could be that the payment slipped their mind. Give a brief, professional reminder that the payment is past due. If you are unable to establish correspondence with the client, leave a message. Continue trying to make contact with the client every day, once a day.
- Stay persistent
- Do not contact at a harassing level
- Leave messages and documentation of notices
Collecting Funds from a Debtor
Sometimes a collections agency is your only option to recover some of your money. If you have already followed up looking for the full amount or even just a partial amount to no success, a collections agency may recover some of the debt owed. This is a scenario to avoid if possible.
Working Capital Management Practices
Eagle Business Credit makes working capital management and client payment easy. Our services include an online portal, so your business can monitor the status of your facility 24/7. Additionally, we offer credit monitoring on your clients, included for free with your factoring facility. This prevents getting in a sticky situation where the payment for your goods or services is unable to be collected due to insolvency. The collections process can be arduous and demanding on small business bookkeepers. Eagle can take some of the burden off your business’ shoulders.
Looking for a receivables management company to prevent client non-payment? Stop chasing down late-paying clients. Get money for your open invoices instantly.