No small business can afford to be a bank, yet many of you extend credit each and every day to clients who want to pay Net 30 or more. If you simply must do business this way, take the time to learn about collecting and creditors’ rights before the unpaid bills start piling up. “Many organizations are so focused on ‘getting the sale’ that they inadvertently do the wrong things,” says Bob Bernstein, managing partner of Bernstein Law Firm, P.C. “It’s understandable. There is an inherent tension between sales and credit, and until your company learns to defuse that tension, you’re going to keep making the same mistakes.” That means you need to pay attention. And Bernstein shares a few little-known creditors’ rights secrets below.
- If a company’s creditworthiness seems marginal, look for alternative pockets. Admittedly, it’s not advisable to extend credit to a company whose application sends up red flags. On the other hand, you need all the business you can get and risk-taking is integral to making money.
- Retain a purchase money security interest with a debtor. A purchase money security interest basically gives you a string on the merchandise and the proceeds.
- When a previously “good” customer stops paying, remember: communication trumps litigation. You don’t want to ruin a good long-term relationship over what might be a short-term customer problem.
- Don’t send a salesperson to do a collector’s job. It’s usually-not always-a bad idea to let your salespeople double as collectors.
“Remember, the biggest sale in the world means nothing until you get paid,” says Bernstein. “Getting paid is what makes companies successful.” Bernstein Law will be holding a teleseminar on getting paid on Sept 12. The cost for the seminar is $79 for non clients. Find out more at www.bernsteinlaw.com
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