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If commercial collections is not part of your
B2B business plan, you're losing money. Get your
cash flowing again with these commercial
collections secrets.
Commercial collections: fixture of the new B2B
culture
If you're in the business-to-business field, or
even if you're a consumer products business that
works through third-party distribution channels,
you probably know what it's like to check your
mail anxiously each day, sifting through all the
bills for that payment that was supposed to have
been in months ago.
It wasn't supposed to be like this. If you were
a good, honest businessperson who dealt with
other good, honest businesspeople, "commercial
collections" wasn't supposed to be part of your
vocabulary.
Back in the good old days, an invoice or
purchase order that had an established company
listed in the "bill to" field was almost as good
as a cashier's check. Nowadays, if you're in the
business of serving other businesses you may
find that your cash flow is less reliable than a
small-time bookie's.
Commercial Collections: A Personal Story
This past April I finally got the $2,000 a
client owed me for work done in December, after
spending almost as much money's worth of my time
reminding them to pay.
No, this wasn't one of those hand-shake deals-we
had a 5-page contract specifying net-30 payment
terms. Nor was this some guy with a lemonade
stand. It was the media division of one of the
largest retailers in the United States.
The worst part was, I trusted this client based
on my experience working with them a few years
before. I actually spent the money on Christmas
presents, fully expecting the payment to come in
before my credit card statement.
Avoiding Outstanding Invoices
Of course, you can nip this problem in the bud
by cultivating strong relationships with clients
who pay on time. But those clients are getting
few and far between-and, as I found, the good
can go pretty bad pretty fast.
Worse, it seems that the larger the business,
the less likely they are to pay on time. "Net 10
days" might as well be a foreign language in
Fortune 500 land. The long-standing advice given
to B2B businesses and self-employed people is
that the money is in big corporations. But good
luck getting it from them before your rent is
due.
What I Should Have Done
Looking back on my experience with the deadbeat
corporate client, my biggest mistake was doing
it all myself, with writing the letters and
making the phone calls. With an hourly rate of
about $75, I ended up spending the time
equivalent of a large chunk of my $2000 fee.
I should have gone to a collection agency. I
just didn't know then that were collection
agencies that would take on small business debts
and run the whole process for you for as little
as $20 per debt.
Of course, I also didn't know that going to a
collection agency didn't necessarily mean
"putting an account in collections." Many
collection agencies are in fact refashioning
themselves as "accounts receivable management"
specialists; they'll even manage your invoicing
from end-to-end if you want. The client may not
even realizing that the person on the phone is
from an outside agency and not your own personal
assistant.
When I think of all the value of the time I
spent collecting that last $2,000, I could kick
myself for not handing it over to a collection
agency. But, I can always look forward to
putting this knowledge into practice the next
time I have a client who's slow in paying.
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