Collecting Your Money

Today, we'll explore effective strategies for small business owners to efficiently collect money. While many excel in sales, they often struggle with collections. This advice, though not universal, can significantly aid those facing collection issues.

The key is to establish a clear accounts receivable goal, such as aiming to receive 70% of receivables within 30 days. Creative approaches, like collecting payments before services are rendered, are also worth considering.

The focus isn't on radically changing your mindset, but on practical methods to speed up collections. With a specific goal for your receivables in mind, let's delve into the five practical steps to achieve this.

1) Contact:

This step emphasizes the need for immediate proactivity after invoicing a client. Contact them, whether through phone or email, to confirm receipt of the invoice. This is crucial because invoices sometimes genuinely get lost or clients may falsely claim they didn't receive them.

While email confirmation is preferred, verbal is also viable. If it's impractical to do this for all clients, especially those who consistently pay on time, prioritize new clients or those with a history of payment issues. It's about balancing thoroughness with your capacity, focusing on clients who may need more attention in the payment process.

2) Document:

As soon as an invoice is overdue, contact the person via phone or email immediately. After that, repeat your attempts to contact them every three days until your attempts are successful. Oftentimes, you’ve got an accounting department, and they’re the ones who are making these calls every three days.

It's important to make sure that when they do communicate with someone they make notes of the who, what, when, and how. Who did they talk to, what was discussed, when will the payments be made, and how will they be made? Once you finally make that contact, it’s crucial to have it documented, whether it’s in your accounting software, a CRM where you keep client notes, a spreadsheet, or even on a piece of paper.

3) Sales:

Let’s say your attempts at contact are unsuccessful. At this point, it’s a good idea to get someone on your sales team to reach out to the individual. I know some of you reading this might be really small, to the point where you yourself are actually all these different departments. For companies that aren’t quite as small, however, it’s a good idea to reach out to the sales person, who has a relationship with the client and can reach out to them.

4) Management:

If after all these steps are taken, there’s still no contact, then it’s time to go up the chain to upper-level management and let them know in detail what’s going on. It’s certainly good to let them know as you go through this whole process, but at the very least let the know that you’re at a stopping point. Once you’ve had this dialogue with them, it’s time to move on to the fifth and final step.

5) Legal/Company:

Following a discussion with upper-level management, you’re going to want to make a decision about whether it’s time to send this to a collection agency or if there will be legal action taken. Sometimes you might want to send a letter expressing your intent to take legal action. Again, I’m just giving ideas, I’m not saying to do any of this exactly. However, if you have a lawyer send off a letter that helps you get your money faster, and the same can be said if you make use of a collections agency. Sometimes people need that extra spark, and you’ll get paid soon.

So there you have it! Those are the five steps for collection, and the most important point is to be proactive. The things you do at the very beginning will definitely help you towards the end. It’s really about proactivity. If this is something you struggle with, or there are any other issues regarding running a small business, sales coaching, or business consulting that you need help with, feel free to call us. In the meantime, go out, be proactive, and have a better than amazing day!

This article first appeared on EntreResults.com blog athttps://entreresults.com/5-steps-to-collecting-your-money/#smallbusinessowners

#businessadvice #smallbusinesstips #Money #entreresults