Resources for Accounts Receivable

In today's troubled economy, late or unpaid invoices are a fact of life for any business that doesn't collect in full upfront. But there's much a business can do to head off trouble before it starts, or to speed up payments. The key is to create a clear collections process at your business. It starts by making smart credit-granting decisions in the first place.

"But I don't grant credit!" you may protest. Yet anytime you deliver a product or service without first collecting payment you are, in fact, granting credit. If you are ever at risk of not being paid, you are — like it or not — a creditor. These five keys to better collections can help you get started:

1. Make your invoicing quick and professional
2. Check credit of major customers ahead of a sale
3. Write customized, personal dunning letters
4. Offer incentives for quick payment
5. Get on the phone with late payers

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Use invoicing software or web-based billing services for a professional look

Crack collections require a buttoned-down invoicing system that's now easier than ever thanks to invoicing software and online invoicing services for small business owners.

Outsource for credit and collection services

D&B Small Business Solutions delivers a variety of debt collection services, including demand letters.

Make your demand letter a grabber

Get online help writing a dynamic dunning letter that will produce quick results.

Plug into business credit reports

Checking business credit can save you time, money and help you make a more sound and informed credit decision.

Summon the collection cavalry while there's still time

Each passing month dramatically reduces your chances of getting paid. Consider bringing in a collection agency after 90 days.

• Your invoice should be clear and simple. It should state explicitly, in itemized fashion, what it is for. Fancy colors or cute designs detract from the purpose. Online services mentioned above will get you a clean, professional look.
• Send a real invoice, not stationery with "amount due" typed in. Make it clear what business name the check should be made out to, and where it should be sent. Include a phone number for questions.
• Missing or confusing information offers an excuse for delay.
• Send invoices the moment money is due. If payment isn't received by the stated deadline (30 days, for example), send a reminder on day 31, not the next cycle.
• If you undertake a long-term project, consider progress billings.
• Request credit references from customers, make inquiries yourself, buy commercial reports (from D&B for example), or combine all three.
• The better your collection letter, the faster the money will flow. Make it a customized, personal letter, not a lifeless form letter. Remind the debtor of his or her original promise to pay. And ask for immediate and full payment (obvious, but often left out).