Cutting costs: maximizing results
The thought of what is our value is very clear to me as I write off debt at the end of the year for clients that did not pay. I begin to admonish myself for letting the client get behind and not managing the account and writing off hundreds if not thousands of dollars. However, as I search the social media posts, I begin to see other colleagues having the same issues. Clients to far past due and that the customer's work is lost along with the opportunity to collect. So I ask you as you write off debt that will never be received what your value is? The amount of time you worked for is still the same but now with lower income. Your "stated value" for service has diminished. Additionally, the collection process will take up more of your time and add to that devaluing cycle.
The overwhelming majority of the accounting professionals I see burned are women, not men. So two questions come to mind:
1- Do the men not talk about the loss of bad debt?
2-Are the women more sympathetic and let their clients wrack up large sums of money before they finally call it quits?Here are some tips that can help us all to avoid the bad debt and loss of our value.
MINIMIZING BAD DEBT
1-Make sure your engagement letter states the consequences for unpaid invoices. I.e., termination of work, collection proceedings
2-Make sure your terms are clearly stated on your invoice - Due Date
3-Get a credit card for ACH withdrawals for service.
4-Send your invoices promptly (this is a difficult one for a lot of our profession)
5--Do not back down. Stick with the late policy.
6-Add finance charges to late bills (collect on them)
7-Offer discounts for early paymentCollecting money from people you like, and I hope you like your clients, is difficult. No one likes confrontation and especially on a sensitive issue
Money. However, do not forget you worked hard for this money, and it is owed to you.
COLLECTING BAD DEBT TIPS
1-Communicate - be professional and courteous
2-Brainstorm - collaborate with the client to come up a solution to pay down the amount
3-Document, Document, Document - Keep records of conversations and agreements just incase the money has to go to collections
4-Negotiate - Will you take less than the amount owed? Some of the money is better than no money-
5-Create Statements and letters of demand. - State how much money is expected, the date of payment due, and action is taken if the money is not received.
6-Draw a line in the sand - Do not add more time thinking they will pay.
When the time deadline hits - Pull the trigger and don't look back.The reason to be firm is to protect what is yours. The money is not just the only loss in these situations. The client work, the business relationship, the personal relationship and the most valuable time are victims of the lack of ability to collect. Professionalism is required during stressful situations and walking away from a losing proposition before you lose more than your money; is very professional.