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What will you do when your customers owe you money? If you've done the work but your clients are slow to pay you - or don't pay you at all! Understandably, this is a very annoying situation. Cashflow is the process of getting the money you are owed in the most optimal amount of time. 1. You Are A Credit Provider Providing an invoice is an extention of credit. If the cost is going to be high, consider running a credit check before you start the work. This will show if the company or individual you are doing work for is having financial problems and you can decline work that you think is risky. 2. Clearly Print Due Dates On Your Invoices If your customers need to pay you now - instruct them to do so! Otherwise, customers will recieve the invoice but put it on their pile of other invoices that arent marked as urgent. In some places, the practice of putting due dates on your invoices might even entitle you to charge interest on money you are owed, or charge fees. Check your local laws. A great tip is to highlight the amount due. People will see this and think more highly of taking care of it. 3. Phone Them People dread collection calls. For this reason alone, phone them! Ask them if they realized the invoice was due yesterday and most of the time action will be the result. Dont ever let them think they can get away with it. 4. Try Debt Factoring Some businesses have a relationship with a third party, often a bank or credit collection agency. Instead of having your customers pay you, the company will pay you right away. The idea is that the credit collection agency will make money from interest if your clients fail to pay on time. Of course, the downside of this strategy is that you will have no control over how the agency is treating your customers. 5. Collections Agencies A more extreme version of debt factoring, a collections agency will actually charge you about 10% of the amount you are owed. Through intimidation and court, the agency will work on your behalf, perhaps even seizing the assets of your customer. Always research these agencies to make sure they have a good business history, and even then, only use them for customers that are far beyond the due date of their invoice. Plus, always try to have one last talk with your customer before this step - sometimes people are really quite lazy or forgetful even though they have plenty of money. 6. Worst Case Scenario In the absolute worst case scenario, you have just done business with a company that is approaching bankruptcy but is not yet legally bankrupt. The money you are owed is a small drop in the lake of debt that this company might be in, and you are at the end of a long line of creditors looking for money. In this situation, you need to be prepared to settle for less than the amount of the origional invoice, or you might risk getting nothing at all. In the end it might be better to give someone a break and get some money than pushing them into legal bankruptcy and getting nothing at all.
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