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Collecting Money for Your Business
03/03/2008 - By Charles J. Di Bartolo How many times have I heard customers complain about giving 30 day terms and waiting more than 60 days for payment. The check is in the mail? Give me a break! Let’s fix it!
When it comes to collecting money I’ve had my fair share of bad payers. I used to be in the wholesale food business. I am so glad I’m out of it now, because I spent half of may time chasing money. I gave terms to people and when things were bad I had to go out and collect. I got every excuse in the book. I always wished there was an easier way. Now there are a few. Hopefully I can show you some ways to collect your money effortlessly.
The first thing you need to get in your head as a business owner, or the head of collections is that you’re not the bank. You are a business. Before giving anyone credit you should use a good credit background check company to check business and personal credit on every individual or business entity that requests credit. You must have them sign a form that allows you to check their credit. Then you must decide on the terms that this applicant deserves. When your terms are up payment should be absolute. The way to improve your chances that you will be paid on time is with an agreement that is signed when your customer asks for credit. It should include an agreement that states what your terms are. In this case let’s use thirty days. Your agreement would state that no payments will be allowed to go past 30 Days. If payments go past 30 Days at 35 Days payment will be deducted from their credit card or checking account. They can choose which method of payment to use on the agreement. A good payment agreement can save your business. Unfortunately most businesses give credit without anything but a handshake.
Your job is to set yourself up with merchant services (or the ability to accept credit cards) and an ACH Program. (The ability to key check into your PC and deposit them into your checking account) These two electronic payment processes can allow you to collect your debts over the phone. Go with a reputable company that specializes in payment processing, and that offers both merchant services and ACH payment processing. ACH programs allow you to enter the routing and ABA# on the bottom of the check into a website database and deposits your check electronically into your checking account, without waiting for it in the mail or physically depositing it in the bank. Merchant services allows you to accept credit cards at your business and deposit the proceeds into your account in is little as 24 hours as cash in your checking account. This is the 1-2 punch that every business should have when it comes to collecting payments before they are seriously delinquent.
Now that you know that you need a payment agreement, and the right tools to collect payments, let’s develop a script to help you collect your debts. It should go something like this:
HI Mr._______ This is Charles from __________. The reason for the call is we have been expecting payment from you for ___ days and you have been overdue. We would like to be able to send your next shipment will you be able to write us a check today?
Yes? Great. Please don’t send the check. Instead we will deduct it from your checking account on Wednesday or would your rather use your credit card? Great!
Using the either or method of payment gives them a choice of ACH or Credit card and takes the check is in the mail excuse out of the equation. If the customer insists on sending a check this would be the time to remind them about the agreement you have. (You must have one in writing.) And that the time to pay by check by mail was in the first thirty days, not after. Your customer will find that it’s easier to pay on time. Hopefully he will pay others late instead, and pay your bill on time. The squeaky wheel get’s the oil in this case. Giving your customers more ways to pay, means easier collections for you.
Take it from someone who has suffered from late payment syndrome. This method works. You will get more respect from your customers. You may loose some of the deadbeats, but maybe your better off. This can allow you to spend your time doing more important things, like growing your business instead of collections.
If you need help with any payment services like Merchant Services, Check Guarantee, ACH Programs, Gift Cards and Loyalty Cards give me a call.
Charles J. Di Bartolo
National e-Pay Services, LLC
973-390-4719
http://www.nationalepay.com
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