It's time for straight talk from a specialist in every aspect of these difficult situations. Someone who has actually been in the trenches indetifying and solving real problems, the right way, for almost 2 decades. I've recovered tens of millions of dollars in payoffs for some of the largest lenders on the planet, as well as some of the top Corporations in the fields we specialize in, with no ill effects for my clients. I also still take the time to educate and assist the little guys, freelancers and small business. When a feel good article that doesn't get you anywhere just isn't enough anymore, my company is who you turn to. So for those of you who still have receivable skeletons in your closet, this article is for you.
Keep in mind that different size/type companies, and different industries, needs will slightly differ. That's what we're here for, if we can't help we'll point you in the right direction.
Note: Larger companies, and high ticket items/services will obviously start with a credit and/or reference check.
Step 1 - Have a solid Terms of Service contract.
a.) Edit it specifically for each job if it is outside of what the basic terms cover. You don't need to be a lawyer, you know what you expect. Make sure your client understands too. Discuss exactly what they expect, and what you plan to deliver. Discuss any potential "what if's" ahead of time. Anything else that goes outside of the norm needs to be addressed in an e-mail or an addendum to the contract, as it pops up, to avoid confusion or misunderstandings (two things that are a non-payers best friend).
b.) Set your payment terms in the contract. Explain your cost/fee structure, and when it's due. In the same article explain in plain English that you'll be due the maximum interest rate allowed by law plus collection costs, and legal fees pertaining to any necessary steps that need to be taken to obtain payment. Don't be afraid that they will see it, in fact point it out! If they run, you just avoided working for free. If you want to do more than "play business" you need to attract, service, and be paid by REAL clients with REAL money, and good intentions.
You may even consider setting your terms with a reasonable margin for error, so that if they make minor mistakes they can fix it in a timely manner without massive penalization. That way you also know that when a red flag does pop up, it's time to address it seriously. In other words if you start getting on everyone's case at "one minute" past due, you may seem unreasonable or unattractive to do business with. However, keep in mind that when you give an inch, they may take a mile. So find a good middle ground for your industry based on experience and business needs.
c.) Get it signed and dated. This validates the above and along with you delivering on your promises, documenting all activity, and proper follow up, covers you when non payment issues come up. You have laid the foundation for maximizing your cash flow and profit. Congratulations!
Step 2- Deliver and Document!
a.) Do your part, deliver what YOU promised.
b.) Keep the communications open, and make them happy. This is your part of earning timely payment. Document that you delivered according to terms in any way possible.
Step 3- Timely and proper invoicing.
a.) Know ahead of time where you need to send the invoice, and what the monthly cut off date is for payment. Get the invoice in the right hands, at the right time.
b.) Your billings should be concise, accurate, and provide the necessary information to enable the client to pay you properly, on time.
Step 4- Follow up
These can be flexible to your comfort level based on experience, and industry timeframes.
a.) Have a procedure in place to identify and flag anything that goes beyond your net terms. Have someone qualified follow up immediately. Point out that it's past due, ask what you can do to expedite payment, & explain how non payment will affect future work planned, act accordingly. This is your chance to nip further possible problems in the bud.
b.) Be persistent. Casually remind them of the terms, and stick to your guns. How they react, and what they promise will determine your next step. Feel free to work with them if you are comfortable, but keep in mind that all of this takes valuable time away from you doing business. Also, document, document, document. Every conversation should be documented as to what was discussed, every e-mail saved, and copies of statements (date sent) kept on file.
*This is where many companies allow invoices to derail because they don't know what to do, and aren't equipped to handle the issues effectively. Call us asap! If you just let them go cold here they are a rapidly depreciating asset. Don't wonder about it, worry about it, or be too optimistic. Give it to the pro's and move on. If you have time and energy to stay with it, keep reading.
Step 5- ACTION
a.) Payments still aren't coming in, promises have been broken. You need to figure out what your staff is capable of handling effectively as far as collections chops and available time. Every organization is different, but you need professionals or funds will still be stalling out and become a loss for your company. We can show you why it's cost effective to outsource to a specialist like us at any stage of the game. We know, however, that if the front lines do their job effectively; it helps us help you. Rather than wait until year end and turn over a portfolio of ice cold accounts with little chance for recovery, work with us to establish a cost effective action plan to always be strengthening your numbers, and maximizing your time and cash flow cost effectively.
Most companies are operating like this.....
Provide product/service - Invoice/Letter process - Weak/Lack of follow up - Invoice goes cold = LOSS
It goes that way because there is lack of knowledge about collection outsourcing & it's effectiveness, or an unwillingness to address these losses for unfounded reasons.Thanks to companies like ours you now have a professional and ethical go to partner to help maximize your access to earned income and profits. Most of the time there won't be any litigation on non-payers (depending on size and industry), and either way a professional collection strategy is a necessary step prior to legal action.
Once you partner with us and allow us to share our expertise, our resources and experience quickly go to work to get back your hard earned profits. Now the flow goes more like this........
Discuss arrangemnt/payment - Obtain signed Terms of Service strengthening your position should non-payment occur - Provide product/service - Invoice/Letter process - Strong, persistent, and effective follow up to resolve any minor issues = RECEIVE PAYMENT AND RETAIN CUSTOMER
Payment continues past due beyond 90 days - Turn over to CRS for collection process - You save time and headache - We go to work for you to maximize your cash flow and recovery percentage before it's too late = MAXIMIZED RECOVERY AND MINIMIZED LOSSES
It never ceases to amaze me how companies are unaware of how much money they are leaving on the table. There aren't many highly experienced professionals with a debt collection and A/R background who are out there writing and educating financial decision makers the way I do. I have found that by doing so we not only attract great new clients, who we are able to help, but we make our job easier by ensuring that organizations do the right things ahead of time to help us be even more effective when the need arises. It's truly a win win.
Companies of all sizes are sleepwalking through their collection procedures & don't realize it. Regardless of whether you are a small business who depends on every dollar (as soon as possible), or if you are a large corporation whose profits are through the roof regardless; there is never room to allow unnecessary losses. What would you do with the money we pump back into your books? Whose salary could you pay? You would have so much more valuable time and money to put back into your business that the benefits of our services REALLY compound over time.
We offer a confidential and concise consultation to determine if, and how, we can help you prior to engagement. The majority of our services are done on a NO RECOVERY = NO FEE basis. You literally have nothing to lose and both time and money to gain! We are not your typical collection agency, we are a highly specialized, top-tier firm, who you can trust as part of your organization.
Thank you for your time and best of luck!
Contact the Author:
President & Principal Consultant
Cambridge Receivable Solutions, LLC
Toll Free: 1-888-908-3905 Ext.101
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