Unpaid Invoices? Debt Collection Best Practices for Small Business Owners

Running a business is difficult enough – no one should have to watch their invoices go unpaid.

Anyone who has owned a small business for even a few years has likely experienced what it’s like to deal with deadbeat clients or customers. It’s an age-old issue that will most likely never go away. This is why it’s so important to learn how to navigate these types of scenarios. Running a business is difficult enough – no one should have to watch their invoices go unpaid.

However, if you are just starting out or on the path to revolutionizing your receivables, here’s a look at seven debt collection best practices to keep in mind.


  1. Create a Clear Payment Policy

    The most important thing you can to do start off is to come up with a payment policy that is clearly outlined in writing and make sure it is handed to the client at the very beginning of the working relationship. This way, there’ll be no arguing about the terms as there might be if you don’t have things down on paper.

  2. Assign Debt Collection Procedures to an Employee

    Sometimes you’ve got to take debt collection into your own hands. If you want to save yourself a lot of time and grief, though, it may be worth passing the procedural tasks onto a specific employee. You might even want to consider hiring someone who has past experience working in collections.

  3. Email Invoices to Customers

    You can certainly mail your invoices via a postal service, but the best way to ensure that your clients are getting their bills is to email them. It’s an especially useful tactic if you’re in regular contact with them via email, as they’ll have no way to argue that they haven’t seen the invoice.

  4. Don’t Hesitate to Send Payment Reminders

    Even if you have invoices that are only a week or so past due, there’s no reason for you to hesitate to send follow up emails to your clients. Politely remind them that their invoice has yet to be paid, and attach a copy of it so that you’re sure they have it in front of them. If your emails go unanswered, it’s time to make a phone call.

  5. Keep Calm

    Dealing with debts can be emotional, but you’ve got to remember that you’re handling a business transaction and thus need to remain professional. Whether you interact with a client who owes you money via phone or email, keep your temper at bay and remain calm, clear and polite. You won’t be doing yourself any favors by getting into an argument, no matter how much you may want to.

  6. Clearly Document the Scenario

    You’ve got to make sure you have your facts straight when dealing with debts that are owed to you. Clearly document the scenario from beginning to end with dates, notes and any other information that is pertinent. This will not only help you to stay organized, but may come in handy in the case that you need to take legal action.

  7. Hire a Debt Collection Agency

    If all else fails and you can’t retrieve your debts on your own, it’s time to hire a collection agency. Not all of these businesses are created equal, however, and some charge exorbitant fees for their services. Speak to colleagues or other professionals in your area for recommendations on who to hire, and don’t forget to read all the fine print before signing anything.


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