+1 212 318 2000
Europe, Middle East, & Africa
+44 20 7330 7500
+65 6212 1000
In tough economic times it becomes more important than ever to make sure companies that owe you money are paying in a timely fashion. In a down economy, normally reliable customers may fall behind or be slower to pay for a number of reasons—including their efforts to manage their budgets and collect from their own slow-paying customers.
The saying goes that the squeaky wheel gets the grease, and nowhere is this truer than in collecting money owed. Making sure you’re first in line is critical to getting paid in a timely fashion.
In my experience, I’ve found that by following a few simple tips and setting the tone early on in a relationship, a business will put itself in a great position to make sure it’s first in line when it comes time to paying bills. These include:
1. When you sign a contract or come to an agreement to provide a product or service, make it clear at that time what the payment terms are and what the results of late payment are. This is also the time to find out who in the organization makes the payments and to get that person’s contact information. A good practice is to follow up with that person and explain the payment terms at the beginning so as to eliminate any doubt or excuse for potential late payments down the road.
2. Once the first invoice and subsequent invoices have been sent, a simple follow-up call to verify that they were received and to reemphasize the payment terms will go a long way toward ensuring that your invoice is put at the top of the pile.
3. If a bill is not paid under the terms of the agreement, be sure to call and find out why and what the status is. By doing this with the first late payment, you’re setting the tone early and establishing the importance of complying with the established and agreed-on terms of the contract.
Finances, past-due invoices, and money owed are always uncomfortable subjects to address. By making expectations clear from the beginning, however, and following up on what you say you’ll do, you’ll demonstrate to your customers the importance of complying with the established payment terms. This will help ensure you get paid and aren’t left in collection mode, which is generally unpleasant for all parties involved.
T. Craig Bott
President and CEO
Grow Utah Ventures
Salt Lake City
Want to improve the way you run your business? Entrepreneurs, academics, and consultants from diverse industries offer practical advice on a variety of topics each business day.
To submit a tip for consideration, first check our archive of previous tips to make sure you're not repeating a tip someone has already contributed. Then send the tip to Small Business channel contributor Michelle Dammon Loyalka. Because of the volume of material she receives, she may not respond to each individual.