60-Second Guide to Collecting Payment

0:36 Take the Right Attitude
Your collections policy will do no good unless you enforce it. Do not shy away from a potential confrontation, but avoid provoking it as well.

0:29 Find Out Why
On the other hand, don?t assume the customer is entirely wrong. Contact the delinquent account and ask politely for an explanation. It may well be that the invoice has been lost or is awaiting approval. A customer with cash flow problems may request extra time. How you proceed may be very situational. Based on your experience with the customer, you may feel confident enough to allow extra time or installment payments. Make sure you and the customer clearly understand any compromise. Be flexible, but firm; and don?t hesitate to follow up.

0:15 Take Stronger Action
If your collection attempts fail, it may be time to turn to an attorney or collections firm. Terms for these services vary; they may require a fee and/or a percentage of the invoice amount, or a retainer. Again, your course of action will depend on the situation. You may decide the amount of the overdue account does not justify the cost and effort to collect. If so, write it off as a bad debt and move on.