Improve Your Collection Techniques

This article is provided by the Greater Scranton Area SCORE Chapter.

The term “receivables” is one that small business owners quickly become familiar. This is money owed to your business. It’s a good thing, since receivables represent sales you have made. But receivables also can become a problem if clients are slow to pay—or worse, if they are not paying at all.

The process of collecting money from customers is a fact of life for many types of small or home-based businesses. But if your receivables are getting out of hand, it might be time to come up with a strategy for improving your collections. There are several things you can do to prevent slow payments before they become a problem, and also to shake some money lose once invoices have aged.

Your aim is to create a step-by-step collections process that starts by making smart credit-granting decisions. And make no mistake: granting credit is exactly what your business is doing whenever you deliver a product or service without first collecting payment.

Customers are more likely to pay quickly if your invoice arrives in a timely fashion and is clear and simple. It should state explicitly, in itemized fashion, what it covers. Make it look clean and professional, and include your company logo. Cute designs may only get in the way.

Design it like a real invoice, not just a piece of paper with “amount due” typed in, and be sure it is clear how the check should be made out and where it should be sent. Including a return envelope can help. Also include a phone number and contact name for questions. Small business accounting programs such as QuickBooks can easily create your invoices. Or a dedicated low-cost software package such as MyInvoices & Estimates for $39.95 from Avanquest can help. Visit

Mail your invoices quickly and send a reminder immediately if payment is not received by the stated due date. On long-term projects, consider progress billings.

If you do need to press for collections, send a customized, personal letter, not a lifeless form letter. Remind the debtor of his or her original promise to pay. And ask for immediate and full payment. By all means, get on the phone. Most businesses wait too long to call. But collection experts say a phone call is ten times more effective than writing or e-mailing.

Collections are just one critical financial issue your small business can face. For expert help and advice, contact  SCORE “Counselors to America’s Small Business.”  SCORE is a nonprofit organization of more than 10,500 volunteer business counselors who provide free, confidential business counseling and training workshops to small business owners.  Call (570) 851.1608 or visit to contact the Greater Scranton Area SCORE Chapter.