Online Extras - Snow Management Operations
ONLINE EXTRA: Collecting delinquent accounts
5/26/2010
mIt’s never easy to ask for money, even when it’s rightfully yours. Oftentimes, snow contractors find it difficult to collect on accounts, whether it’s because they’re dealing with a valued, long-time customer or simply a past-due debt.
However, it’s important to remember every dollar collected on your receivable accounts goes directly toward improving your bottom line, and, by that same logic, every dollar uncollected is a strike against your snow removal operation.
There may not be a single approach to collecting accounts. Sometimes, it’s a combination of strategies that will help you collect the most money. The National Federation of Independent Businesss offer some ideas for preventing, as well as minimizing, problems with collecting on your snow removal accounts.
Stay on top of things
It is important to try to collect when the sale is made or the service is rendered.
When you invoice, do so promptly. Keep your invoices up-to-date and ask for payment within a 30-day maximum period. If the client doesn’t pay, re-bill promptly.
When an account is delinquent, contact the client immediately. Make a point to speak to the person with whom you have been dealing at the company. An effective approach is the following three-step process: after the initial call, follow up with a letter. If payment still doesn’t arrive promptly, follow up with another phone call and then a letter outlining your discussion.
Have a contract
Written contracts eliminate most disputes. Regardless of how well you think you know the person, a written contract is a must. This document is the proof of the terms of your agreement you would need should the matter ever go to a collection agency or to court. Additionally, many people with written contracts ask for part of their fee up front. That amount can range from one-third to one-half.
Although verbal promises may often be legally binding, they are more difficult to enforce. Often it’s just one person’s word against another. Avoid this situation.
Know your customer
It is important to have your customer complete a credit application. The more information you have about the owner of the business and the business itself, the more the better prepared you can be when it comes time to bill.
Stay organized
That means keeping all old invoices, bills and other records of the transaction. This is important if you ever need to have collection begin on the account. A judge will give more weight to written evidence versus oral claims.