Don’t take this personally…But you personally owe me money!

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November 4, 2015 by Harry Stoll

I would never recommend this telephone approach to collect an unpaid invoice, however, I know this is what many small business owners are thinking when making that call for payment on a past due receivable. You work hard and spend your money on materials to assist your customer, and now you are calling to be paid after being ignored for too long.

A big challenge for some small business owners comes when it’s time to be paid. Fortunately, with a little preparation, you can speed up your revenue cycle, and develop the business radar that sounds off when an account is headed for collections. If you’re using effective communication techniques and working with financially troubled clients through tough times, you may end up with devoted customers for life.

Late-paying customers usually fall into one of three categories. 1. Customers who are willing to pay and acknowledge they owe you, but because they have real financial problems, can’t pay on time. They are typically willing to communicate. 2. Customers who prefer to delay payments. They may send you a little bit here and there, and will avoid you if possible. 3. Customers who avoid any payment. They will break promises to pay you and they may even skip town.

You may be able to manage debts in the first two categories by convincing the debtors to make partial or full payment. But you need to recognize what type of debtor you are dealing with, and do so as quickly as possible. Even though asking for money can be uncomfortable, don’t delay. The longer you wait, the harder the money will be to collect. Prioritize those debts you can work on internally. Those debts, if any, you determine will be too time-consuming or too costly to work in-house can then be sent to a collection agency.

One rule always applies to effective collections: Get busy as soon as possible and stay on the account until you’re paid. Send bills promptly and re-bill monthly. Send past due notices promptly once an account is overdue.

Here are some more tips:

• Don’t harass. But let the debtor know you follow these matters closely. Don’t leave more than one phone message per day for a debtor. No threats!

• When making a collection call, be direct, listen, and don’t get personal. Keep your calls short and be specific. Always stay calm but always maintain a sense of urgency about getting paid. Prevent the debtor from taking your call for payment as a personal affront. It’s not personal. It’s business.

• Write demand letters, make phone calls, and send a series of letters that escalate in intensity.

• Be creative. If the customer has financial problems, ask what amount can be realistically paid. Consider extending the time for payment if the customer agrees to a new payment schedule. Monitor the payment agreement.

It’s imperative to recognize if an account has become too delinquent. If you need help collecting a debt, turn it over to a collection agency pronto. Turning a debt over to collections can save you time and money, not to mention the aggravation of dealing with those unwilling to pay. The sooner your collection agency is able to begin working on a debt account, the more likely a collection will be made. When the debt account has gone unpaid for too long (90-120 days) chances are the debtor has broken more than one promise to pay you, or the debtor has skipped town. It’s time to turn it over without further delay.

Founded in 1950, United Credit Service, Inc. is a full service, licensed revenue cycle management and debt collection agency in Wisconsin providing effective, customized one on one management and recovery solutions for our business partners. Visit our website at, call 877-723-2902 or check out our YouTube video.


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