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Bernstein Burkley
  • Practice Areas
    • Overview
    • Bankruptcy & Restructuring
    • Business and Corporate Transactions
    • Creditors’ Rights
    • Litigation
    • Oil & Gas and Energy
    • Real Estate
    • Real Estate & Commercial Finance
  • Our Attorneys
  • About Us
    • Our Approach
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    • Bernstein’s Dictionary of Bankruptcy Terminology
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Q&A
Q&A

Why is “collections” such an important issue for businesses?

Posted on October 29, 2012 by Bob Bernstein

Collections

A: Many companies put huge amounts of effort into selling, but when clients and customers are reluctant to “pay up,” they drop the ball. But until you get the money you are owed, you haven’t really made a sale at all! One all-too-common problem: clients who do (eventually) pay, but who fail to pay on time. According to a study done by REL Consultancy Group in Purchase, NY, as many as one-third of all big corporations pay their invoices late. That can create a real cash flow problem, especially for small businesses. And even worse are those clients who refuse to pay at all.

There are some simple things you can do to increase the likelihood of collecting from delinquent or non-paying clients:

  • Make sure your invoices are accurate, timely and payable . The February issue of Fortune Small Business reported on a company who boosted cash flow merely by changing the color of its invoices from white to blue. Presumably, customers “saw” the blue paper and paid that invoice first. Also, ask clients how they prefer to receive invoices. E-mail? Snail mail? Fax? Mid-month? End of month?
  • Get on top of past-due situations immediately. Another tip from the aforementioned article centered on a PPR, a Florida healthcare consulting firm, that reported sales of $33 million last year, up 25% from 2003. Its secret? Implementing such non-glamorous techniques as sending a friendly hand-addressed reminder postcard to any company whose payment was a single day late.

When you’re tried everything and the client or customer still won’t pay, you may need to resort to more complex strategies and/or take legal action. That’s when you need a creditors’ rights law firm. Do not wait. Early intervention is key.

 

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