Entrepreneur
Article
By Brendon Sinclair

Sensible Debt Collection

By Brendon Sinclair

This post has been republished from the SitePoint Tribune #427. Subscribe to the Tribune today to receive more business tips like this in your inbox, weekly!

In the SitePoint Forums the other day, I noticed artcoder had asked a question that is quite common for business owners: is it worth chasing money owed?

Like most people, I’ve had bad debts over the years. The best way I’ve found to deal with slow or non-payers is to use a system. It doesn’t really matter what your system is — as long as you have one.

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Here’s an example:

  1. Project’s completion: invoice for final payment
  2. 30 days later: reminder notice
  3. 7 days later: phone call reminder/request
  4. another 7 days later: final demand notice with 3 days to pay
  5. 4 days later: letter explaining how you’ll proceed from here
  6. 2 days later: phone call to confirm you are now taking further action

Now, your further action could be sending it to a debt collector, asking your lawyer to become involved, or making a small claim through the court system. Whatever it is, just do it and forget about it. You’ll now either receive your money, or you won’t.

The beauty about using a debt collector or tribunal is there will be a mark on the client’s credit history. Whenever they apply for a loan in the future, that mark could well stop them; I’ve heard of people being paid two years down the track, because the client wants a clean credit report to enable them to secure a loan for a house.

Be consistent with your debt recovery, and you’ll have less headaches and more time to devote to doing the important work — the work you will be paid for.

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