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If your customers owe you money, it's time to start thinking about a more efficient cashflow process. When youve done the work but people are being slow to pay you, you can get behind with bills and be short of money to invest in your business. This is, understandably, an annoying situation - youre being chased for debts that other people refuse to pay. Believe it or not, there are lots of tricks you can use to speed up how fast you get paid. 1. Remember Youre a Credit Provider If you plan on working on an invoice sumission basis, you are extending credit to your customers. As such, if the cost is going to be high, consider doing a credit check - hey, you can never be too careful. This will show you whether the company youre about to do work for is in trouble, and can help avoid lots of problems later on. You can usually run credit checks onlin for next to nothing. 2. Give Invoices a Due Date A mistake many home businesses make is to send invoices that have a fancy layout and say how much the customer owes, but dont contain any direct instruction to pay now. This results in customers receiving the invoice and putting it on their unimportant chores pile - you know, the one that doesnt get done for months. 3. You Could Try Debt Factoring Some businesses have success with a technique called debt factoring. This is when you sell your invoices to a third party who specialise in administration and collection, and they give you the money for the invoice straightaway instead of you having to wait for the customer. 4. Collections Agencies Of course, your last resort is to sell the debt to a collections agency. This will cost you around 10% of the debt. The collections agency will try to intimidate your customer into paying, ultimately taking them to court if necessary, and they might try seizing the customers assets. Make sure you check out the agency you plan to use beforehand, though - you dont want them to be doing anything that is against the law. 5. Be Prepared to Settle The worst case senario is being owed money by a company that is on the verge of declaring legal bankruptcy. In this situation, chances are that youre just one in a long list of creditors, as everything falls down around them. In this situation, you need to be prepared to settle with them for less than the original invoice price, or you risk getting none of the money you are owed at all.
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