Bad debt collection tips for small businesses

Nothing satisfies an accountant more than to see positive and strong cash flow combined with minimal bad debts. Running an efficient business is demanding but none more so than in the bookkeeping and collection of debts owed.
Poor payers usually use one of four standard responses: I already paid, I cannot afford to pay, I will not pay, or I will pay sometime. Dealing with these responses quickly can vastly improve cash flow and keep the accountant off your back.
I already paid – ask for proof of payment, a copy of the cheque or ask them to check with their bookkeeping service that the payment has actually been made. If more than ten days has elapsed ask for a new cheque or go legal.
I cannot afford to pay – Ask if there is a prospect of the account being paid soon. If the customer is a good longstanding payer and is experiencing only a short term cashflow problem then you may wish to extend some credit. If there is little prospect of positive cash flow in the coming weeks then consider legal action and advise your accountant and bookkeeping service.
I will not pay – Identify why the payment will not be made and try to resolve any differences. If the dispute applies to a portion of the bill then try to get the rest paid whilst negotiating over the other. If the customer will not negotiate then consider legal action.
I will pay sometime – Ascertain what the delay is and get a firm date for payment and follow up relentlessly.