Owning a small or medium business can be especially frustrating when your clients are paying late or not at all. It's good to note that how you respond to these situations will affect the success of the debt collections and if you can retain the client as a customer. In this post, we will offer tips to ensuring your invoices are paid on time and we will share how and when you should send a business to collections.
Yes, a business can be sent to collections.
Read more to learn how.
How can I increase invoice payments?
There are several tips to increasing invoice payments that you may already be following including:
- Invoicing at regular intervals
- Including payment terms in your contracts
- Following up when payment is due
It's also important to recognize that the reason for the late payments may not have anything to do with you. Instead of taking it personally, start with a friendlier approach and gradually increase your assertiveness. Make sure to keep records of all communication attempts, including their responses, so you'll have a running log for reference.
When do I send a business to collections?
Collecting on your invoices or what's owed to you seems like a straightforward premise. Your business and your client have agreed on goods or services, the terms and the cost. You've followed through on your end of the bargain but they, for some reason, haven't. Some customers simply will not pay on time for various reasons including:
- They don't know that they owe you (misplaced or missing invoice)
- They don't know when payment is due (missing payment terms or due date)
- They can't afford it
- They're unhappy with your service
When you've followed up with the client again and again, they're refusing to pay or they're non-responsive, or if it's been 30-45 days, it's time to send them to collections.
See also: What to do when you're ready to sue
How do I send a business to collections?
Sending a business to collections is relatively easy and could cost nothing. Enterprise Recovery, as an example, only charges a fee if we're able to collect on your account. Whether it's one or multiple invoices doesn't matter - only that you have an agreement, sent an invoice and your client hasn't paid. When you followed up with the client and documented your communications, that information is important and is helpful to collections. The collections agency will do the hard work of connecting with your client and searching other ways to contact a non-responsive client. Click the green button below to learn more.
If you are a small or medium business owner and have questions about sending a client to collections, please contact us and we'd be happy to help. Our business is here to support your business-to-business collections needs!
