Dealing with business collection is something that every company 
faces at some point. A single client in collections can hurt your 
business, not only financially, but also in terms of frustration 
and lost time. The good news is that you can easily avoid most 
situations that would leave you in the lurch if you follow some 
basic steps.

Here are five key areas of business collection that every 
decision-maker needs to cover in order avoid using a collection 
agency and to maximize the chances of getting paid on time:

#1 - Do top-quality work

One of the most common justifications for customers not paying 
their bills is claiming that the work wasn't done properly. 
Disputes can leave you in collection limbo for months, even years. 
And many businesses just give up.

Time is money. The quicker you get in and out with quality work, 
the more you make. The key is to do what you contract to do.

Most business owners take pride in their work. But if your client 
perceives a compromise in quality it could give them an excuse to 
delay payment.

A thorough understanding of your client's expectations is vital. To 
make sure you're clear about what you're expected to produce:

#2 - Communicate clearly with your clients

Unrealistic expectations about a job can lead to delays in getting 
paid if the end results aren't what your clients envisioned. Don't 
assume that they see the same mental picture that you do, or 
understand the necessary steps and costs involved. Spell it out for 
them up front.

Brief your employees and subcontractors to communicate changes and 
problems to you right away. Also, make sure that your people treat 
your clients with respect and courtesy. Tension and conflict only 
cause communication to break down.

And good intentions and clear communication must be backed up by 
thorough documentation:

#3 - Do all of the paperwork

Business collection is almost always a no-win scenario if you can't 
back up your claims. Without proper documentation, you could find 
yourself in a "he-said, she-said" situation that leads to a dead 
end when you try to collect. You're not insulting your client by 
requiring a written agreement, or for any subsequent changes to be 
agreed in writing.

#4 - Evaluate your potential client before you contract

You should feel comfortable that the people you contract with are 
good and reasonable. Some won't pay until you force them into 
collections. You have to trust your gut instinct. Go with that, and 
not your wallet!

You'll probably have at least two or three chances to interact 
before making a commitment in writing. People give off all kinds of 
indications that result in our having a feeling about them. Look 
for obvious warning signs, such as being asked to work without a 
written contract, or to accept changes without documentation. If 
you're a subcontractor, make sure that you pay attention to the 
general contractor's reputation. Don't assume that you will be an 
exception to their noteworthy practices.

There's nothing wrong with researching your prospects. Check them 
out, especially if you're working for them for the first time, 
because they will almost always check you out!

And you'll save yourself a lot of time and frustration when you:

#5 - Have a plan

Every company should have a plan that details, at minimum, its 
procedures for business collection. Most potential problems can be 
easily avoided by following an effective blueprint for doing 
business.

The longer a problem continues, the worse it gets. Don't let it 
fester. Problems often intensify simply because the business owner 
isn't prepared to address them. Don't be shy about covering 
yourself! Your best bet is to avoid the extra work and frustrations 
involved with business collection.

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The best mentors for small business owners are people who run 
successful businesses themselves. For more information on 
collecting past-due accounts and other tips to help you prosper in 
your venture, please read more of what these business veterans have 
to say on a variety of topics at http://www.bymichaelriley.com.

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Ivana Katz
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