If you run your own Internet-based home business, then it’s crucial that you stay on top of collections. Besides, letting one or two client payments slip through the cracks could end up crippling your finances.
In order to avoid a collections catastrophe, here are a handful of ways your home business can get its collections practices under control:
Implement a Payment Policy
Without a clear, well thought out payment policy in place, there’s a good chance you’ll experience past-due payments. To avoid this situation, you should include a payment policy alongside all of your invoice documentation.
This payment policy can include a payment timetable as well as the fees involved for past-due charges. Your payment policy should be realistic, so don’t create a policy that requires your customers to make next-day payments.
Likewise, don’t be too lenient with your payment schedule either. A 30-day collections schedule is usually standard.
Businesses sometimes experience an influx of late payments due to confusing invoices. If you feel as though your home-based business falls into this category, you may need to give your invoicing format a makeover.
You can start by making sure the words “invoice” or “payment due” are clearly displayed on the invoice.
Likewise, you should also make sure the due date is front and center. To avoid discrepancies, make sure you itemize all charges including late fees and any applicable taxes.
Don’t Be Afraid to Go the Collection Agency Route
As the following article looks at, if delinquent payments are taking over your collections, then “Fight back! Don’t let your credit collections control you” or your home business.
When payment policies and customer-friendly invoices fail to do the job, it’s probably time to turn to a collections agency.
There’s nothing wrong with using a collections agency to collect delinquent payments. Just make sure you use an agency that has a good reputation and doesn’t use scare tactics to get results.
Additionally, give your customers at least 90 days and plenty of notification before turning their account over to a collections organization.
Make Collections Calls
Sending a payment reminder via email isn’t as effective as making a phone call, especially when a customer or client is consistently past-due with their payments.
With that said, although you may feel frustrated with the customer in question, it’s important to be as courteous as possible during the call.
Don’t call delinquent customers demanding payment. Instead, politely remind them that their payment is past due.
Likewise, have additional payment options available including extended payment plans. Extended payment plans will seem less daunting to your customers, which will likely result in cooperation.
Track Payment Patterns
Running your own home-based business and your own collections department is a ton of work. However, tracking customer payment patterns can help cut the work in half.
By tracking your customers’ payment habits, you can quickly find out which customers have trouble meeting their due dates and send them reminders more often.
Likewise, payment tracking will also help you predict when you might have collections issues, which is always better than being taken by surprise.
Photo credit: Image courtesy of Boaz Yiftach at FreeDigitalPhotos.net
About the Author: Adam Groff is a freelance writer and creator of content. He writes on a variety of topics including home businesses and finance.