For small businesses, cash flow is everything. No matter how well prepared you may believe yourself to be, delayed payments from your biggest clients can put you out of business so fast your head will spin. In order to protect your business from that devastating outcome, here are a few tips to on how to write collection notices that will motivate your customers to respond quickly and affirmatively.


Be firm, but friendly

One good way to get your customers to take care of an outstanding balance is to send them a friendly but firm reminder. This reminder should include a link that would allow them to pay their bill straight online and your company’s phone number so that they can call in to discuss any issues that would prevent them from making a timely payment. These kinds of reminders are also useful because they might prompt customers who receive them to make an additional purchase or to recommend your business to a friend, so make sure to keep the tone friendly and light with a firm undertone. A friendly but firm notice is best utilized for relatively small balances that are only slightly overdue.


Be cordial, but serious

Once a customer has failed to pay you upon a mutually agreed-upon deadline, you should send them a polite but firm past due warning. This warning should communicate the seriousness of the issue and should be rendered in simple black type with certain key phrases highlighted in red. The language of the notice should be terse as to hit the reader with greatest possible impact. While no business owner wants to damage their relationships with their customers, delinquent balances not only affect your cash flow, they also force you to waste time that would be much better spent growing your business. Cordial, but serious notices are best for medium to large overdue balances or debts of a smaller size that have been outstanding for more than a month.


Be authoritative and direct

According to Appraisal Press, 75 percent of outstanding debts are paid within the first 120 days of coming due. Beyond that, you should probably abandon any notions of collecting the full amount you’re owned. In order to minimize the time you spend tracking down old debts, send customers who are severely delinquent an authoritative and direct past due notice. It should explain in the most direct terms possible that if their balance isn’t paid in full by a certain date, you will be turning over their account to a collection agent, an action that will likely affect their credit score. The language in this type of notice should be very formal and should repeatedly underline the consequences of non-payment. The direct and authoritative past due should be focused on resolving the debt, not maintaining the relationship and should only be sent to customers with long overdue balances or those with a history of making late payments.

This article was written by Mario McKellop for Small Business Pulse


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