Pursuing debts has always been a thorn in the side of small businesses, but amid the current economic climate many owners are feeling the need to crack down harder on delinquents. Thirty-four (34) percent of business owners who issue credit reported that they’ve upped their debt collection efforts over the past six months, according to a recent poll by the National Federation of Independent Business.

Establishing a system for how you deal with payment problems (late-payment, non-payment) before they arise and making sure your customers are aware of the penalties is important for managing debt collection issues, as well as keeping the issues to a minimum. Unfortunately, too many small businesses don’t even bother to collect late fees or charge interest. In fact, 63 percent of them don’t, according to research by the NFIB.

As an entrepreneur it’s up to you to protect your money, so do you and your business a favor by implementing a debt collection/late-payment system and keep up with it.

When customers fail to pay, send letters, emails or telephone calls, whatever it takes to get the money (without threatening the customer of course—it’s illegal). I’ve even heard that handwritten notes are more effective than computer printed messages. If all else fails, take the customer to small-claims court. Whatever route you choose, make sure you take action quickly. The older the debt, the less of a chance you’ll collect on it.

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