For a small business owners one of the hardest problems to handle is not being paid paid for your product or service. If it has ever happened to you it is one of those things you never want to have happen again.
The first thing you can do is to do thorough credit check before you offer credit. Before you give anyone credit you should make them complete a credit application, perform credit checks, and get at least two trade references. Most people and companies understand the need for this information and will gladly give it to you. It is important for you to remember that credit is a privilege and not a right, so be firm on this.
You need to send an invoice out the day that you complete the service or send the goods. Always try to send a copy with the products and to the acounts payable department to make sure they have received it. Your shipping Bill Of Lading should have all the shipping information, product codes and should include a copy of the invoice.
Make sure that you get the name of the person who the account is payable through. If you have the company, fill out a credit application form than you should have the name of that person already. It is possible that you will speak to a number of people and get varying responses, but if you speak to the same person each time and keep notes of your conversations they will be accountable for the payment.
On the day that the payment is due you should call and ask when it will be made. It is early in the collection process so don’t be aggressive, but by calling early you will encourage a slow payer to pay more promptly. The conversation can start with quality assurance questions such as, did they get the product on time, was the work done to your satisfaction or let them know the special steps you may have taken to assure they were satisfied. If all is well you can casually ask when you can expect payment. By making the conversation about them and their needs it will be easier to get what you need.
The final way to encourage a person to make a payment on time, or early, is to offer them a discount. You can offer a small but significant discount for early payment. It is important that you only offer this if you can afford to. You can place this offer on the original invoice and on any shipping papers. Let them know up front that they can save money by paying early.
Not being paid for your services is one of the worst things that can happen to a small business owner. Offering credit can be a good way for a business to get orders for their goods or services, but only when done the right way. With the information in this article you should be able to safely offer credit to customers, knowing that you will be paid on time, if not early.
