- Send your invoice immediately when the work is complete.
- Clearly state the terms (including the interest rate for overdue accounts) on the invoice.
- Send your 30, 60 and 90 day reminders promptly.
- Request the ten-day demand letter be sent from Sterling Credit immediately after the 90 day period. Use our online form
- If you are concerned about the debt, or have experienced a history of late payments with a customer, send us a copy of the invoice immediately after the 30 day due-date on the invoice. Time is of the essence when collecting bad debts.
Common Debt Collection Errors
If you are creating your credit policy and just starting out, you may not be familiar with some common errors or mistakes business owners make when collecting on past due accounts. Here are some of the most common mistakes.
- Not checking customers' credit history before extending credit.
- Not getting a credit application, agreement, or contract in writing and signed.
- Not being familiar with the rules and unintentionally "harassing" a debtor.
- Overlooking small balances.
- Not asking for the money that is owed because you hate asking for money.
- Not knowing when it is the right time to turn a debt over to a collection agency.
- Not having a credit policy in place and enforcing it.
- Extending credit to anyone who walks in the door or calls on the phone because they "sound like they will pay."
- Not taking action on NSF notices or bad checks.
- Not using letters and forms to collect on past due accounts.
- Not having a credit application.
- Not pulling credit reports and checking references.
- Not understanding how to communicate with customers so they stay current.
- Not having a budget and controlling cash flow.
- Not knowing how to effectively do business online.
- Not using small claims court to your advantage.
- Not understanding how a collection agency can work for you.
- Not knowing how to set up realistic payment arrangements with customers.
- Not knowing what to do if a customer dies or files for bankruptcy.
- Not training oneself or staff.
- Waiting too long to use a collection agency.
