According to IBIS World, the debt collections industry is a 13.4 billion dollar industry for the United States alone.
Wow, that’s amazing. While I know this statistic likely talks about personal debt, please know hundreds of small business owners with funds locked up in their accounts receivable right now, Meaning; they did a job for a customer, and the customer hasn’t yet paid.
Depending on your terms (due upon receipt, net 15, net 30, net 45), some AR (accounts receivable are OK if they fall within your grace period. If I was a net 30 and my customer didn’t pay until net 45, that’s acceptable. But if they didn’t pay 60 or 90 days out, that’s not OK.
So, why are small businesses afraid to do collect calls?
Many reasons. Mainly because it feels uncomfortable.
But uncomfortable has worries and issues behind it.
- What if I’m the annoying vendor and they won’t work with me again?
- What if they talk to my prospective customers and make me out to be the wrong person?
- What if they say my quality was terrible and argue the total balance down?
What ifs. I’ve heard them all.
The truth is, there’s nothing personal about collections. You performed a service or sold a product. It’s their responsibility to pay you. By you calling, you’re not doing anything wrong! They are. They’re in the wrong for accepting your service or product and not paying you on time. They broke the contract. Not you.
If you’re still saying, “Yeah, but Janet, you don’t understand,” I hate to tell you this, but it’s a mindset issue on your end that you need to fix right now. Don’t make excuses for your customers’ lousy behavior.
Do you have questions for me about collections? Please place a comment in the blog, and I’ll get back to you.
Janet Johnson is the author of My Money Pivot: An Entrepreneur’s Guide to Finding & Making More Money. Before becoming a coach, Janet gained seventeen years of experience in a family-owned manufacturing company. She also trained small business owners in Financial Management and Lean Enterprise for seven years through contracts with the State of Connecticut and the Small Business Administration for seven years.