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Jim Finucan's Bill Collecting Q and A, Issue 4
By Jim Finucan
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Q) My small business has grown over the past year, but with the
growth I also have more past due accounts. This is the first
year I’ve had these problems. Am I doing something wrong?
Tom S., Boulder, CO
Dear Tom:
There’s an old saying “If you don’t have accounts receivables -
why not?” I don’t know enough about your billing procedures to
know if you’re doing anything wrong, but let me start by
congratulating you on the increased growth of your business in
what was for many a very difficult year. Because you are doing
more business now you are experiencing the associated aches and
pains of having more accounts to worry about. Let’s look at some
basic structure that lays a good foundation for loss prevention.
Do you make your fees clear to the client before agreeing to
provide your product or service? Some people are uncomfortable
doing this and think it is counter-productive. Nonetheless,
subjects like price, payment method and other contract terms
should be covered up front. Make sure the customer understands
his obligation to you before you do business with him for the
first time.
What does your contract include? Do you offer a discount for
quick payment? (Sometimes this is a good idea.) Do you specify a
certain number of days after which the account is considered
delinquent? Is there a clause that allows you to add collection
costs, attorney fees and interest if the bill becomes
delinquent? If not, those costs will come right out of your own
pocket!
And when a bill falls into the delinquent category do you have a
procedure to follow? If not you should have such a procedure and
you should be sure to follow through on it. (I’ll deal with this
topic in a later article.) Despite the delinquent accounts it
sounds like 2001 was a great year for you. I wish you an even
more successful 2002.
About the author:
Jim Finucan is a 13-year collections veteran who has doubled the
annual gross collections at every firm he has been associated
with. His book “Past Due A Collections Manual” will show you how
you can achieve the same results.
http://www.tiare.com/pastdue.htm
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