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Cash Flow Tip: Set a Deadline for Debt Collection
Small businesses often don’t set a deadline for debt collection which can seriously interfere with their cash flow.
“Rule No. 1 when it comes to receivables is to be impatient. I would say that [waiting too long] is the biggest mistake a company can make,” says Francois Sauvageau, president of Collection Systems Canada in a interview with Paul Brent of The Globe and Mail (Be impatient when collecting bills).
Good advice, I think, especially as so many small business owners (including me) are reluctant to go after slow paying or delinquent accounts receivables. It’s time consuming and often a waste of time.
But that’s exactly why these proactive policies that cut down on the debt collection you need to do are so important. Besides setting clear deadlines for payment due, you can use strategies such as running credit reports on potential customers and invoicing promptly when a job is done.
Close the Cash Flow Gap presents more ways to get customers to pay their bills on time and avoid the whole debt collection process.
Have a lot of overdue accounts or wondering if or when to hire a collection agency? Paul Brent’s article Be impatient when collecting bills provides details on how collection agencies work.
Image (c) Richard Drury / Getty Images
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