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How do I deal with clients who don’t pay?

| Jan 15, 2015 | Business Collections |

There can be a great deal of satisfaction in owning and operating your own business. Identifying a need and filling it is the very essence of the entrepreneurial spirit that keeps the economy in North Carolina plugging along.

But there is one thing that is critical for any business to succeed, and that is good cash flow. Regardless of the size of your business, if you can’t ensure that money is coming in the door at a higher volume than it is going out to pay for business operations, it’s not likely that you will be able to keep the doors open.

There are times when goods and services are so costly that they can’t be handled in a single one-time exchange of cash. That’s where credit and trust come into play. And if customers don’t make good on what they owe, it can pose a threat to business survival. When limited time and resources make debt collection a burden, there are ways, some prescribed by law, to legally address the situation.

If you are starting a business or operate one and debt collection is seen as a problem, here are some thoughts to consider.

To begin with, the customers likely to require the greatest attention are those who do anything to avoid paying. Others can be more easily worked with.

The general strategy for dealing with the artful dodgers is to act swiftly, with determination, and to employ solid communication techniques. That means sending invoices and reminders right away and being patiently persistent in seeking payment.

And here are some suggested communication best practices:

· Don’t harass customers. Deliver no more than one message a day and never threaten.

· Keep phone contacts brief and to the point. Short, formal and on-message calls are best. Stay calm and avoid language that might imply judgment.

· Follow calls with demand letters. Keep these formal and on message, too. Keep copies of all letters you send. They can help support more robust collection efforts that might be needed later.

If conditions escalate beyond these steps or they are steps you don’t feel you can take, contact an attorney to discuss your possible options.

Source: FindLaw, “Small Business Debt Collection,” accessed Jan. 15, 2015 

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