Jul 21, 2020
Collecting from your clients can be a tedious process at times. However, there are early warning signs that you could pick up that could help you find out who exactly is going to be a bigger problem than the rest. We’re going to explore the first warning sign that your client could be a potential collection issue in the future.
The First Warning Sign
Before you have just absolute chaos is that you start seeing your clients moving a bit further out. It doesn’t matter whether they were a good or bad client, you just see them start making payments later and later. They start running behind on payments and. When they used to pay at 15 days, they started paying at 30 to 45 days out. What was true six months ago, could be absolutely nothing further from the truth right now.
Your business is certainly experiencing COVID right now and so are your clients. They could be fighting some significant cash flow issues that could get you in trouble as well.
Wilson’s Recommendation
The unstable economic climate created by COVID should be your signal to start making preparations. You should already have your timesheets, and your fee agreements in order, and you should start doing credit checks on your clients. Credit checks, in particular, can be a very powerful tool for you to utilize as it lets you make sure you know what to expect from them moving forward.
Samantha’s Recommendation
One of the best things you could do right now is to make sure that you have all your paperwork in order from the get-go. It isn’t when they are already 45 days isn’t the time to realize that you don’t have a signed contract with them. Keeping up with correspondence can also be a valuable asset for you.
For example, when you receive an email telling you that they’re going to pay next week, you should make sure to keep that email. It makes it much harder for them to get out of paying you in case you have to go down the legal route. This is called a reaffirmation of debt that lets you back them into a corner in case they refuse to pay.
Key Takeaways
- Right now because the economy is fighting COVID it is more critically important right now than it ever has been to focus on good fundamentals and to pay attention to the warning signs.
- In my opinion, you should have had, especially during this COVID economic climate, you need to make sure you have your timesheets, your fee agreements, pull your credit checks and credit applications, and things along those lines. Those should have already been done.