How big a problem is debt collection for small businesses, including writers?
Debt collection has always been a problem for small business owners but due to the economy it has become an even bigger problem that is even harder to solve.
Small business owners go into business because they are good at a particular thing, and that is what their business is usually based upon. Most small business owners are not experienced in debt collection and so when it comes up – they have a problem. A problem they don’t know how to avoid, a problem that they don’t realize is preventable and a problem they want to ignore and hope that goes away.
How do you collect the money that is owed to you?
The most effective way to collect any money that is owed to you is to make a personal visit to the person who owes you the money and ask for it. Most business owners do not want to do this – and so I offer the second most effective way to get paid, which is making a phone call.
My advice when someone owes you money:
1. Visit them and ask for it.
2. Start buying your morning coffee where they get theirs – and say good morning.
3. Call them
4. Call them again
5. Keep calling them
6. Send a collection letter
7. Put their account on hold
8. Report the debt to a credit bureau
9. Revoke their credit
10. Send a final notice in a flat rate priority mail envelope
11. Take them to court
What are the most effective/least effective tactics?
Most effective:
Personal visits
Phone calls
Revoking credit
Putting an account on hold
Collection letters sent in non-traditional ways
Offering solutions to continue having a relationship while getting paid
Credit reporting
Court
Least effective:
Ignoring the account and hoping they will pay
Not calling because you don’t want to make them mad
Not having a signed credit application
Not having specific payment terms that the customer is aware of
Not contacting the customer
Accepting their excuses and still not getting paid
These are very helpful suggestions, thank you Michelle. I understand in addition to writing and marketing your books, you are a self syndicated columnist for 10 newspapers and publications as well as an Editorial Advisor for "Collector Mentor" magazine. How can we learn more?
You can reach me online at MichelleDunn.com and Credit-and-Collections.com.
I'm offering a free e-book to your readers for a limited time. It is called "Effective Collections: A Proactive Approach to Credit Management". You can check it out and download a copy here.. You can find my new book on my web site and on Amazon.
Sometimes writers need to be reminded... we are business owners. When we have a contract to write and perform that service as requested, we should be paid. I feel like it's David vs Goliath when it comes to being paid. I think i'll try your collections suggestions now. I have two publications that are over 90 days late. I'll let you know how it turns out.
ReplyDeleteNice book cover!!
ReplyDeleteFor your advice in number 11 - are you referring to small claims court? can regular people do that or would I need a lawyer?
ReplyDeleteThank you for your comments. Wordsaplenty - regular people can use small claims court, you don't need a lawyer. Just be sure to have as much of a paper trail as you can. Bring copies of your agreement, any emails between you and the person who owes the money, maybe a copy of the published work to show they did use it and didn't pay you for it.
ReplyDeleteLike your tongue-in-cheek morning coffee suggestion. I'm looking forward to reading your book.
ReplyDeleteThank you for responding. I thought I needed a lawyer to do that. Glad to learn I don't.
ReplyDeleteJust wanted to say I've used Michelle's suggestions for collections and have had success. I've made some uncomfortable phone calls, but if that's what it takes to get paid - it's worthwhile. Thank you Michelle for sharing these helpful tips!
ReplyDeleteThank you Brigitte! I appreciate being able to share what I know to help others get paid.
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