Debt collection is a cause for concern to any business.

If you have to give credit (which is often the case) you should certainly keep a record of money owed to you.

The following steps may help when a customer is late in paying a bill :

1. You should make your credit terms clear to the customer before you start the job.

2. If they don’t pay within 30 days, wait for a week and then send another invoice stating Payment overdue – please pay within 14 days. Often a red sticker, with the word please on it, can be effective. You may also try calling your customer in person and ask for the outstanding money – remember to be firm, but polite.

3. If there is still no payment after the 14 days, wait for another week and then write a formal letter saying that, unless full payment is made within seven days, you will be obligated to put the matter in the hands of your lawyer. So far, the process hasn’t cost you too much – only your time, postage and stationery – but from here on it will cost you money.

4. Go to your lawyer and ask him/her to write to your customer demanding payment within seven days and a warning of legal action to follow if no payment is received

5. If there is no response to your lawyers’ letter, you need to consider if it is worth taking things further. You can go to the small claims court (which is relatively inexpensive if you represent yourself), but even if you get a favourable judgement from the court, there can be difficulty with the enforcement of the judgement. This is where the expense really starts. Alternatively, if there is no response to your lawyer’s letter, you could put the debt in the hands of a debt collection agency which will charge you a percentage of anything it collects.

SOURCES :

Cronje & Cronje
Business Partners