Today’s tip comes from Ryon Gambill, founder of Bill Collector in a Box, whose software helps entrepreneurs and business owners collect money they are owed.

The most important aspect of getting paid on time is being clear about what work was done, how much should be paid, and by when. It’s surprising how many smaller companies don’t have this process adequately defined.

When a company runs into problems, it’s those creditors who can prove that the work was ordered, performed to specification, and invoiced according to agreed procedures who will be paid first.

Chasing down a debtor who is overdue in settling a past-due invoice can be a frustrating and time-consuming part of running a small or medium-size business. What many business owners do not realize is that timely invoicing and follow-up means fewer collection problems.

To reduce the need for collections measures, implement these tips into your invoicing and accounts-receivable procedures:

• Add a bold due date to your invoice.
• Make a courtesy call to verify your customer received your invoice. This is especially important if this is their first credit transaction with you.
• Make certain that all customer service issues are addressed immediately so that they cannot later be used as an excuse for withholding payment.
• Do not accept temporary checks with handwritten account numbers on them, or a check number below 200.
• If the credit transaction is being done in person, verify the customer’s identification.
• If the credit transaction is being done over the phone, attempt to verify the customer’s information via the telephone directory, a Google search, a Zaba search, or some other online database.
• Have the customer acknowledge acceptance of the terms by signing (and dating) the invoice. This can ensure protection against later fraudulent charge-backs or stop payments.
• Start collection efforts immediately when the account or invoice becomes past due. Even reputable companies and consumers run into financial difficulties so it’s important that you stick to your policies and inform your debtors when they are late on payments.
• Remember, the squeaky wheel gets the grease. Don’t give up easily and remember not to take it personally when a customer is unwilling or unable to pay.

If you have a tip, resource or strategy to help small businesses, send it to jnorman@ocregister.com. If I use it, I’ll give you credit and link to your Web site.

This entry was posted on Thursday, March 20th, 2008 at 1:00 am and is filed under Finance, Tip of the Day. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.