The term "receivables" is one that quickly becomes familiar to small-business owners. This is money owed to your business. Receivables can become a problem if customers are slow to pay - or worse, if they are not paying at all. The process of collecting money from customers is a fact of life for many small or home-based businesses.
Your aim is to create a step-by-step collections process that starts by making smart credit-granting decisions. Make no mistake: Granting credit is exactly what your business is doing whenever you deliver a product or service without first collecting payment.
Customers are more likely to pay quickly if your invoice arrives in a timely fashion and is clear and simple. It should state explicitly, in itemized fashion, what it covers. Including a return envelope can help. Small-business accounting programs such as QuickBooks can easily create your invoices, as well as low-cost software packages such as MyInvoices & Estimates from Avanquest. Visit www.avanquestusa.com.
If you need to press for collections, send a letter. Remind the debtor of his original promise to pay and ask for immediate payment. By all means get on the phone. Collection experts say a phone call is 10 times more effective than writing or e-mailing.
Stephen L. Rosenstein is co-chairman of Greater Baltimore, SCORE Chapter No. 3. Call 410-962-2233 to speak to a SCORE counselor or visit www.scorebaltimore.org To send a question to SCORE representatives, e-mail firstname.lastname@example.org