To ensure being paid according to the terms of your agreements with clients may involve your relationship with them if they are not able to pay all of their bills, It can go both ways, because you are close, they want to pay you on time or because you are close, you will be more understanding about a late payment.
Either way, your clients shouldn’t be paying their bills with your money or just simply growing their business with the money that they owe you.
In this economy, you should not allow your clients to be 60 days delinquent without doing something proactive about it.
Are you afraid that you will lose a client if you turn them over to a collection agency? If they are not paying you, they are not your client; they are your dependent.
Every contract should include a clause that says that if your clients don’t pay in time, they will have to pay for court costs, attorney’s fees, any other legal fees and collection agency fees.
Think about using a credit card service. The credit card fee is far lower than a collection service fee and much lower than you writing off 100% of what your clients owe to you. Look at the credit card service as insurance against the emotional drain of dealing with nonpaying clients or customers.
If your clients are really not able to pay the whole amount that they owe you, work out a reasonable payment plan, but stop giving them more products or services. If they are really hurting financially, giving them more services or products will end up giving you both nothing but grief.
All collection agencies are not evil, we are helping small business people stay afloat. There are a few guidelines that you should use when using an agency.
Never pay anything up front. The agency should be paid only if you get the money from a client whose account you have turned over to them. At that point, whether the client pays you or the agency, you will pay the agency fee.
Never sign a contract with an agency that includes an exclusivity clause.
The agency should be willing to give you the name and phone number of three existing clients.
No amount of money should be too small or large for them to handle for you.
The management staff of the agency should have a good knowledge of your industry.
The procedure with the collection agency should be simple. You sign a simple contract without a lot of legalese, give them your debtors contact information and history, and then get the agency a copy of your contract with the debtors and their invoices and statements.
The bottom line? Starting getting your money up front, or your clients may begin paying their bills with your money. Try to get cash. If someone cannot pay you today, how are they going to pay you a month from now? Don’t be afraid to ask questions. Perhaps they have a genuine reason why they believe they will be able to pay “next month”. If you bill them monthly, make sure you have the money far in advance of the next month.
Direct line: 678-640-4896 irissalmins@yahoo.com
irisblogs
Getting the money up front is the best advice right now, especially during these tough economic times. If a client is not solvent, there is not much that a collection agency can do.
Welcome! Yes, getting the money upfront is the best advice, right now. If a client is not solvent, if they are not paying any bills, then they are bankrupt/out of business. If they are in business, someone is getting their money. Many times all it takes is a phone call or E-mail for the client to pay. The point I mentioned about taking them to court, rarely, very rarely happens, but when it does those clauses are a good insurance.