Hoch Law Firm handles commercial collection and business to business collection matters. Over the years we have learned a number of simple valuable lessons.
There are typically 3 types of customers who do not pay. The first type is the customer who wants to pay and has every intention of paying but simply does not have the cash flow or present ability to pay. The second type is the customer who will pay you but not before trying to stretch the receivable or knock you down on price or terms. The third type is the customer who simply wants something for nothing and refuses to pay.
The first thing I advise my clients is to make certain you protect yourself on the front end. Make sure payment terms are clearly and explicitly stated in writing and have the customer sign the document. This is the most frustrating thing I see when I meet a new client. They don’t have anything in writing. Or they had an initial contract but failed to get the “add ons” in writing. You will save yourself a great deal of heartburn by following this simple rule. And if a potential customer balks at reducing your agreement to writing-run!
Second, if the contract is big, make certain you get periodic payments. Have them tied to specific dates or performance.
Third, DO NOT ignore your receivables. I am astounded at the business owners who come to me with a receivable that is 90 days old that has not had ANY collection activity. If your receivable is 120 days old or greater there is a less than 50% chance that you will collect that receivable.
This brings me to my next point. You should tailor our approach to collections to the type of customer described above. The customer who is simply having cash flow problems needs a baby powder approach. Communication is key. Find out why they are having problems. Understand their business. Stay in touch. Work something out.
The second and third types need a little heavier approach. Again, be sure you communicate firmly with each one. And do not be afraid to use gun powder. With these folks, time is money. You are probably not the only creditor they are trying to avoid. Take quick decisive action. Call Hoch Law Firm, collections attorneys in DFW, to handle your collection matters.