Are you ready to move your business to the next level? If so, one of the first steps for you to take is to make sure your financial house is in order. Selling promotional products to clients who pay you on time can make the critical difference in the health of your business. In the rush to acquire new customers, you must make sure that clients have the ability to pay you in a timely fashion. Chasing after delinquent accounts saps your energy and enthusiasm and affects your ability to achieve your financial goals.     

Here are a few tips on how to identify and avoid slow-pay situations:

1.   Keep a shape eye
When you call on new prospects, take time to look around the environment. You may notice signs that a business is struggling based on the dynamics in the office. Or you may observe some unusual business practices such as human and paper chaos, inadequate staffing, etc. You’ll know if things don’t feel quite right and that should be a red flag to you when it comes to accepting orders from new customers in such settings

2.   Set boundaries
Be safe and ask new clients to pre-pay for their first order. After all, don’t most suppliers ask the same of you? If you pay your bills on time, then such a request should not be offensive to you. Nor will it be to your customers. In the case of large companies, it may not be possible to get paid upfront due to their accounting procedures, so you want to be sure and call on the most financially viable ones. Read your local business publications and newspapers so that you can avoid calling on companies that receive unfavorable press.   

3.   Request financial information
When you sell orders to new customers have them fill out a brief credit application.  Most people will be happy to give you that information, which will help you decide on the type of terms to extend to them. Honest people won’t hesitate to fill out your credit form because they have nothing to fear. Those who do balk might be the ones who could pose a future collection problem, so proceed with caution.

4.  Stay connected
Make a point to stay involved with new customers from the time they place an order until you send them an invoice for your services. Doing so will help insure that everything, including payment, goes as planned. If new customers are slow to respond to questions about orders and to proof approvals, they may be slow to pay. So watch for these red flags.

5.  Bill promptly
As soon as you receive a supplier’s invoice for a completed order, create and send an invoice to your customer. The faster you get out an invoice, the faster you’ll get paid, which will help your cash flow. Another tip is to invoice clients through your Distributor Central account. The electronic invoice you create there is e-mailed directly to clients and gives them the option to pay the bill with their credit card. When you are paid this way, the funds are quickly deposited in your bank account, cutting days off the time it takes for a check to come by mail and then to clear the bank. Prompt billing also gives you the chance to send out flyers and other promotional materials to customers that can generate future sales.  

6.  Set a collection schedule
Once you’ve decided on customers’ payment terms, you need to have a consistent plan on how to remind those who get behind on their payments. If you’ve communicated that your terms are net-15 and someone has not paid within that timeframe, you could send him or her a friendly reminder. If that fails to yield the required payment, then you will need to call or fax them again in a few days.

The next step is to send out “past due” notices, if necessary. Whatever the policy, it just needs to be consistently implemented.   

The last resort

In some instances, no matter what steps you take to secure payment, someone will invariably not pay.  When that time comes, you have some options:

Option A: On smaller invoices (check with your county to determine the maximum amount of debt), use Small Claims Court for collection.  Nine times out of ten, as soon as the debtor receives the copy of the suit you have filed against them, they will call and say that the matter is a big misunderstanding. They’ll claim they have never received an invoice and are happy to pay as soon as they receive one. In the end, they’ll usually pay you.

Option B: In the event that a case actually goes to trial, be prepared at your appearance and you will most likely receive a judgment against your delinquent client. When you win an award from the court and are not paid by the debtor in the time allowed, pay a small additional fee to the sheriff’s department to have them execute the judgment for you by going to the debtor’s place of business to collect the payment for you.   

Option C: To collect larger debts and to cut down on your anxiety level, employ a professional collection agency to help you get paid. The agency will charge a flat fee (25% at the most) but has a high success rate at collection. The fee you pay the agency is well worth the money and satisfaction you will receive when you are paid the money that you are owed.

Whether you’re an established distributor or one who is just starting out, spend adequate time planning and implementing the necessary processes to make sure that clients pay you. A sale is only a sale when you have received payment for it. Understanding the power of the purse and not being reluctant to implement a business-like approach will make the difference between a mediocre business and a booming one.