Ensuring Payment

How can a business survive when it's not getting paid? Your business will suffer a great deal even if you have a lot of accounts receivable but you are not getting any payments. If you are producing something, for example, you need to buy raw materials in order to resume production. Thus accounts receivable are no good unless it is being received promptly.

Here are tips on getting the compensation that is due for any product or rendered service.

If you have a first time customer or a new account, either you ask for a prepayment, also called down payment, or you ask the customer for a credit reference. He may know a customer of yours who has a good credit record in your business transactions. In turn, you could offer them a discount or shipping at no cost.

If you are brave enough to skate on thin ice, take the precaution of limiting the amount of credit that you will give them on the preliminary orders. You can limit the first three orders to 100 dollars for instance. In this way, you are still comfortable even if the customer doesn't pay on time and your business can still continue operations.

Follow the standards of how to make collections when the compensation doesn't arrive at the expected date. First of all, you can mail to them a letter of reminder for the first thirty days. Within the next day, you can give them a call then do it again in the next two weeks. Remember to be polite. Make sure that you don't end the call until you get a commitment from them regarding the date that a check will be sent and how much the check is for. If the customer continues to make promises but doesn't keep then its time to hire the services of a collection agency. They would know how to twist an arm.

If your product or service was ordered by phone using a credit card, call them to verify the account number, when the credit card expires, and the total balance left on the card. When shipping merchandises, make sure to put the name of the person who made the order including the address used. Don't accept PO boxes.

It sometimes happens that the person ordering is not the same as the one on the shipping address like when a sister orders a present for a brother. Anybody can just pick up the package anonymously if the address is a PO Box.