Bad debts are a serious drain on a business, but one that it doesn't have to put up with. Here are some tips to help avoid the deadbeats, and get them to pay when you do run into them.
1) Establish a credit policy and stick to it. Make sure all your employees know what is acceptable and what is not. There should be somebody who can make a reasoned decision in special cases.
2) Check references on credit applications. Ask for references appropriate for your business. Call the references given, and understand that they are likely to be favorable (that's why your applicant listed them). Don't be satisfied with a mere satisfactory report. Ask specific questions, such as how often payments were late and by how much, what kind of excuses were given if late payment was made, the maximum that was owed and how much is owed now.
3) Bill promptly and clearly. The bill or invoice should go out the same day as the merchandise or service performance. Make sure the invoice clearly states when the bill is due, and what happens if it becomes delinquent.
4) If you are getting the run-around from a company, go to the officers of that company.
5) Follow up quickly. One tactic that worked for one company was to call overdue accounts every five days, first thing in the morning.
6) Have an escalating scale of contact methods and styles to use. The first reminder notices can be humorous, warm and friendly. As the debt becomes older, the niceties gradually get dropped. Do NOT ever threaten the customer, however, unless you are prepared to follow through with
threatened legal or collection action.
7) Be prepared to act quickly to recover unpaid bills - before a debtor closes shop or goes into bankruptcy. On the other hand, understand that many businesses are struggling along, and if you have confidence in them, most will sincerely try to pay you what is owed.