Les Chayo, an attorney with offices in Los Angeles and general counsel for the California Rental Association, offers 10 tips to speed up collection of receivables:
1. Establish your collection policy and share it with your clients. It’s important to tell clients up front when you expect to be paid.
2. Offer a discount for early payment.
3. Invoice promptly and often.
4. Don’t wait for a bill to become overdue before you call the client to check on the status of the account.
5. If your call to a client reveals that the bill is unpaid because the client is unhappy with the job, resolve the problem.
6. Use an aging sheet so you are aware where each client stands.
7. Call overdue accounts regularly.
8. Don’t be afraid to be in the client’s face. Your client is likely paying some of his or her bills—be the squeaking wheel that gets the cash.
9. Train all staff to recognize the need to collect on receivables.
10. For the true deadbeat, consider filing a 1099 form with the IRS for “Relief of Indebtedness.” Then the deadbeat at least will have to pay taxes on the money he owes you!
Les Chayo can be reached at 310/277-6337.