Business & Finance Credit

Delinquent Account Collections and the Independent Business

It is great to be your own boss and chart your own course of action. But being an independent business owner or a freelance contractor means that you not only get a bigger share of the profits, you also get a bigger share of the headaches. There's no one to pick up the slack, for instance, when a client is late-paying or worse yet– non-paying. You and you alone must absorb those losses or spend your own man-hours tracking them down.

Here are some suggestions for reducing the risk of large accounts receivables and even what to do if they do become oversized.

1. Standardize
If you create a standard business contract and use it with every client you can minimize your risk of non-payment. Make it part of the contract to outline not only the description of the services to be rendered but also the payment amount and schedule expected. Many small or private businesses ask for 50 percent of payment up front and the balance to be paid at completion. You know your business best, but make it clear from the first that payment should be prompt and full per your stated expectations.

2. Bill Promptly and Professionally
Whatever your billing system, make sure it is efficient and consistent. Invoices should be mailed out quickly and non-payment issues should be addressed immediately. Every contact with a late-paying client should include communication about the amount owed and what will happen next. It is appropriate to follow up mailed communication with a phone call every week until the bill is cleared.

3. Participate in Professional Organizations
There are many good reasons to join a professional association. Among them is the resource of communal experience. Others in your line of work have had to deal with problem account collections. Learn from them. The association may even be able to offer legal assistance or counsel.

4. Outsource Account Collections to a Professional
Tracking down bad debt is frustrating, time consuming and costly. The hours spend pursuing delinquent accounts are hours not spent pursuing new sources of revenue. At some point, it makes sense to turn the problem over to someone with experience. Most experts agree that accounts which have aged three months or beyond are best pursued by a professional debt collection company.

Omega-RMS is an account collections company which has spent 40 years helping businesses large and small recoup the money they are owed while working to preserve the business-client relationship.
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