A Guest Blog By Raymond Joseph, Joseph & Marees PA
30, 60, 90 Days? .... When to Act ?
My checklist for when a client should turn over an account for collection.
"The check's in the mail".
"Things are a bit tight right now".
We are waiting on our money, but we will send you a check next month. We promise".
Sound familiar. Unfortunately, you've heard them all before. Some are made with good intentions, but most of the time the results are the same....disappointment and likely cash flow problems for your business.
MY CHECKLIST FOR WHEN A CLIENT SHOULD TURN OVER AN ACCOUNT:
1. If the debtor breaks a promise, even once. My rule of thumb is pretty simple. A person's word is their bond. If they break it, even once, they'll do it again. Explain to the debtor that you may be willing to work with them, as long as they keep their word. As soon as they don't, it's time to act. As my Dad used to say "Fool me once..."
2. If the amount you are owed, is more than you can afford to write off. This may sound obvious, but most of us (myself included) are usually optimists. Especially if we are worried about losing money. We want to believe the lies we are told. We may need to believe them, because the alternative is worse. Ironically, sometimes the bigger the debt, the more reluctant the client is to admit that there could be or is a problem. Many clients are embarrassed to admit they may have "made a mistake" by extending too much credit. Forget it, don't feel guilty for extending credit. With extending credit comes a certain amount of risk. If you are not having any write-offs, your credit policy is probably too tight. The only solution is to take action, immediately. Many times we can help turns those lemons into lemonade. (How to will be described in a future article).
3. The debtor refuses to return your calls. Again, very simple. If they won't talk to you or communicate with you, your wasting your time. And time is not a commodity you can afford to waste when it comes to collections.
4. If the debtor refuses to make an immediate payment, even a small one. I'll tell you one of my favorite techniques. I call it my personal "lie detector"test. It's usually very accurate. I give the debtor a very simpletask with an immediate deadline, i.e. "send me $500 today, as a sign of good faith" I make sure the amount and deadline are realistic. If the debtor breaks this small promise, you can bet he'll break a bigger one. Many times clients tell me they are waiting for a $70,000 check that the debtor is going to send "in just a few weeks". I remind them, if he just got through bouncing a $500 check, why wait another month hoping for that $70,000 check.
5. A bounced check ! This is a sure sign of trouble. As well as time for immediate action. Florida also has a beneficial worthless check statute. For a copy of the form letter that must be used, checkout our website.
Raymond Joseph
Joseph & Marees, P.A.
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