Have a Plan for Collecting Overdue Bill Payments

Question: Several of our clients are getting slower and slower at paying. The overdue notices and e-mails I send aren’t getting much action. And I dislike spending my time dunning people by phone. So far it hasn’t been a big problem. But if it persists, I’m concerned about my own cash flow. What do you suggest?

Answer: Late or unpaid invoices are a fact of life for any business that doesn’t collect full payment in advance. But there’s much a small business can do to head off trouble before it starts, or to speed up payments.

The key is to create a clear collections process by making smart credit-granting decisions. “But I don’t grant credit” is a common protest from small business owners. Yet anytime you deliver a product or service without first collecting payment you are, in fact, granting credit. If you are ever at risk of not being paid, you are — like it or not — a creditor.

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