For businesses, unpaid or delayed payments from customers have a serious effect on the ability to generate profits. With bills unpaid, a company may need to take out loans to pay their own bills. These loans can make an additional interest expense. While businesses want to keep relationships with customers positive, it is also necessary to have strategies in place to collect owed money. Continue reading for several effective debt collection strategies to help bring in the missing funds.

1. Before the Sale

There are many things that can be done before resorting to the  Best Collections Agency. For larger contracts or business ventures, consider running a commercial credit check. A credit check will show whether a customer is likely to pay on time. Obtaining credit history allows a business to choose the terms of the sale. For example, a customer with a poor credit history may be required to pay in full before they receive services. Or, they may be required to provide a large down payment or a higher annual percentage rate if given a credit payment option.

2. Simple Payment Options

The easiest payment method is requiring full payment prior to any service. When this is not possible, try requiring a large down payment of 25 to 50%. If no down payment is collected, send an invoice as soon as possible, and consider providing a small discount if the bill is paid within 10 days of receiving it. Make sure the invoice states that the bill must be paid within 30 days. 

The more payment options that are available, the better. Accept credit cards, debit cards, and direct debit. Accept several payments planned in the future. For example, post-dated checks or direct debit may be acceptable. It is always beneficial to accept any payment that the customer is willing to give even if it seems small. Document the amount paid, and then send another invoice immediately showing the amount still owed.

3. Communicate

Sometimes, balances are left unpaid because there was a miscommunication about services, goods, or payment amounts. A customer may believe they have already paid the full amount based on information from a salesperson or other company professional. Make a phone call to talk to the client and clear up any misunderstandings, explain the balance due, and try to make a payment by phone. If the customer will not pay, be persistent. Continue to contact them by phone and mail. Use certified mail with the first mailing, as this can confirm the customer’s address and will be evidence that you contacted them regarding the debt. 

4. Consider a Settlement

While it is preferable to collect all money owed by a debtor, sometimes it is better to collect some than none. Consider making a settlement with a debtor and at least ease the loss. 

5. Call a Collection Agency

If the debtor still will not pay, it may be time to consider hiring a collection agency, as they have more experience collecting money than a small businesses does. They will help keep the collections process separated from the business, thus saving the relationship with the client that you worked hard to achieve. Although a collections agency will charge a fee, they often take a portion of the collected money, so there is no fee upfront. 

When attempting to collect a debt, be firm yet polite. Try a few of these strategies to settle the books.