Sometimes you may feel that you are running another business entirely and you feel that you are running your own debt collection business. Collecting monies from clients can be frustrating, time consuming and ultimately costing you money while doing business. This does not even include the amount of focus that it takes away from the core of your business. If you are a small business owner and you have to do many of the tasks yourself, bad clients and slow paying clients can be a real thorn in the side of your growth. Suggestions on how better to deal with it.
- Prevention. Any small business owner will tell you that a certain amount of them doing business is by their gut feelings. If you feel that a client is a potential problem then it may actually be better not to deal with them. Some times forgoing something can actually be better. I have found this a very good way to grow and develop my own small business.
- Short payment terms. Whenever you have new clients, it is better that you start them off with smaller accounts, and as they pay them on time, you can start to increase the amounts of work you are willing to do for them. If they are larger companies and they will not accept shorter payment terms then you can limit the amount of the value of the work that you will do for them until you see the accounts being paid on time. This is a very effective and safe way to bring in new business and also manage your risk.
- Penalty and discount clauses. Penalties included in the payment terms of your contract may be a good way to go, and I have also found that it worked in most of the cases, however, offering a discount for accounts that are paid early is a much more positive way to deal with a relationship with your client. Our goal is to avoid being involved with debt recovery, not planning for it. Steps to avoid it where possible are the best.
- Agency. Employing an agency can be a normal part of your business procedure, particularly if you are a small business and you don’t have the time or inclination to get involved is messy arguments with your clients. If you have gotten into this situation with a client then you are best not to be involved with them again under any circumstances. Maybe you can develop a relationship with an agency that takes care of all this hassle for you. This will give you more strength and professionalism and you may wish to build the cost of this into all of your work somehow.
- Using social media. Social media is a powerful force and you can come up with many ways to influence non-paying clients if you wish to do so. Bad word of mouth travels extremely fast, and can damage any company for a long time to come.
Whatever the case, prevention is better than finding solutions when you are already in that situation. Prevention of dealing with non-paying clients should be at the heart of your operations.