The Collections Struggle


By Erin Baehr

Business is tough enough these days without dealing with unpaid receivables.  Anytime you extend credit to a customer you take a risk, but having good policies in place can help.

If you don’t keep on top of receivables customers can fall behind before you realize it.  Cash flow is the lifeblood of a business; make billing a priority.

Spell out your payment and collection policies for customers at the time of sale so there is no misunderstanding. A discount for prompt payment can incent the customer to pay your invoice before another.  Conversely, impose a late fee at a predetermined time.  Customers will soon know you are serious and less likely to put your bill aside.

Before extending credit, know your customer and gather as much contact information as you can.  Run a credit check if appropriate, and use a check authorization service.  Make it as easy as possible to pay you.  For recurring payments, offer credit cards.  The cost involved is minimal versus the greater certainty of payment.

For larger jobs, consider payments at benchmarks of progress, minimizing the amount of work you may not be paid for.

Follow up a sale with a note or call to head off buyer’s remorse. Address any dissatisfaction that may lead to non-payment.  Customers who receive excellent service may be less likely to stop paying because they will want to use your services again.

When a customer is late, call after 15 days to ask why, and follow up with a note.  After 30 days, send another statement with the past due amount highlighted.  The next contact, at 45-60 days, should note all conversations and contacts, and state that it may be turned over to an attorney or collection agency if not paid by the specified date.  Use templates, and have a consistent process.  Offer payment options, lesser service options, or negotiate the bill if needed.  Don’t be afraid to stop working if a customer is not paying.  After all, if a sale isn’t paid for, it isn’t really a sale; it’s a gift.

Erin Baehr is a Certified Financial Planner™ and Enrolled Agent.  She is the owner of Baehr Family Financial, a Fee Only financial planning firm in Shawnee.  She can be reached at or 570-223-1550 or find her on Facebook at