Managing collections: how to collect outstanding debts in a tough economy.

Author:Dalton, Daniel
Position:SMALL BIZ BEAT
 
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Nobody needs to be reminded how tough these economic times are. One of the keys of surviving and thriving in this economy is keeping accounts receivable in check. In collecting outstanding accounts receivable, a balance must be struck between forcefulness in collecting the debt and good customer relations to keep a client. When balancing the payment versus the possibility of future work, consider the following tips:

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1 Create a collection plan. Do not feel any remorse in preparing a plan of attack to collect debts. Remember, you did the work, created the product or addressed an urgent client need that the client agreed to pay for and for some reason, has declined to pay. Make a plan of attack, put the plan in writing and share it with everyone in the office who is part of the collections team.

2 Make the call. Sometimes the hardest part of collections is starting. Go to the client's office, pick up the phone and call or send an email asking about an outstanding bill. When communicating, be assertive, polite, tactful, confident and goal oriented to get paid. Make it a priority to call, collect and follow up.

3 Prepare to compromise. Like all business dealings, it's important for you to strike a balance between assertiveness and good customer relations. Taking something as opposed to nothing is better in the long run for your sanity and your bottom line. Think of alternatives to cash--such as bartering services, referrals or taking a promissory note with a personal guarantee if the client has the desire to pay, but has lost the ability to do so. You want to avoid alienating...

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