One of the most important aspects of running a profitable business is effective procedures for billing customers and collecting payment. The keys to an effective billing and collection procedure is establishing terms with your customers and consistent invoicing. In addition, you should follow up on all invoices that are not paid in a timely manner. You should also make sure that you know how and when to turn to your local court for collecting debt, say New Jersey debt collection lawyers.
Discuss Billing Terms with Your Customers
If you establish billing terms with your customers, they are more likely to pay you on time. You should establish your billing terms prior to doing any work. You should model your billing terms on what is typical in your industry. In your billing terms, you should establish the following:
- The price of your services or products;
- The date when the payment is due such as upon receipt of invoice or within 30 days of receipt; and
- The manner of payment such as credit card, cash or check.
Consistent Invoicing Practices
You should establish consistent procedures for invoicing that you, or your employees follow in order to meet the expectations of your customers. For instance, if you bill your clients on a monthly basis, you should send your invoices on the same day each month. If your billing terms are payment upon receipt, then you should include the invoice with the product delivery. Delays in invoicing practices result in delays in payment.
Procedures for Unpaid Invoices
It is important to note that some of your customers will not pay in a timely fashion. You should establish a method for keeping track of overdue invoices and following up on unpaid bills. The first step should be to call your customer and find out why the bill is not paid. It could be something as simple as a mistake on the invoice or an oversight. If you can find out the reason, you can facilitate payment of the invoice.
Collect Unpaid Invoices Using the Legal System
As a last resort, you can file a court case to collect debt on unpaid invoices. Each jurisdiction has different rules governing small claims court. It is a good idea to familiarize yourself with collection procedures and how your local court handles such cases.
The main difference between jurisdictions is the maximum judgment limit for small claims court. For instance, the limit in Kentucky is $1,500 and $15,000 in the state of Delaware. You should also be aware that you have to stop collection efforts if the customer files for bankruptcy. In that case, you will have to work with the bankruptcy court along with other creditors.
Seeking Legal Advice
Each business is unique, so there is no one-size-fits all solution for debt collection. If you have questions about laws regarding debt collection and billing practices, you may want to speak with New Jersey debt collection lawyers. To schedule a private and confidential appointment with New Jersey debt collection attorneys, call the office of Snelllings Law LLC at (973) 265-6100.