Once an account is past due, companies that haven't been paid can employ various tactics. Fred Steingold, a business lawyer in Ann Arbor, Mich., and the author of The Legal Guide for Starting and Running a Small Business (Nolo Press, $24.95), says companies that are owed should create a series of increasingly urgent reminders insisting on payment. Past-due notices should be sent promptly and should ask clearly for payment, he says.
Les Clark, president of The Credit Recovery Co. Inc., a Woburn, Mass., collection agency, says companies should take a somewhat different approach. He says one friendly reminder letter after the original bill is enough, and then it's time for the next step.
"You don't send out 15 more bills," he says. "You may send out a second bill and say, 'Gee, we haven't heard from you,' and then you specify a payment date that's maybe 10 days to two weeks later. If you don't get something then, you re on the phone. But most firms, because it's easier to do, send out bill after bill after bill."
Bob Ragland, owner of a, ServiceMaster franchise in Columbia, Mo., files a lien against the property of clients who fall 90 days in arrears. That way Ragland- whose business does home cleaning and post-disaster repair-is almost sure to be paid eventually, and usually just the threat of a lien is enough to make people pay up.
Such tactics are rarely necessary, he says, because he bills quickly-within 48 hours of providing a service-and follows up with both a letter and a phone call if he's not paid within 30 days.
The Final Steps
If your firm is owed payment on a number of past-due bills, consider turning them over to a collection agency. But remember that the agency will keep from one-third to one-half of the amount collected. Some agencies also charge their clients for small-claims-court costs if the collection process goes that far, check us out today at www.greenprofitrecovery.com
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