As a small business how can I prevent unpaid accounts?
At LCollect we have been working with small business for a number of years now and this is 1 question that always comes up after the successful recovery of a debt.
We have found over the years that many of our small business partners want nothing more than to help others and often advance credit for those small jobs such as plumbers repairing leaking taps, mechanics replacing a fuel pump, veterinary surgeries providing urgent care to a much-loved family pet, etc In the heat of the moment though, payment for the services rendered is often overlooked until later down the track and is often forgotten by the consumer over time or the invoice amount disputed. So what can you do to minimise your loss?
Having a Signed Contract or Agreement
Any agreement for the work you perform should be in writing and signed by all parties. This agreement should outline the name of the parties, the service to be provided, the total cost (as a minimum) and your payment terms. Before attempting to draft a contract yourself, you should speak with a qualified legal practitioner.
Apart from having a signed contract or agreement, it is particularly difficult to argue when good records are kept. We recommend that if the prescribed work is going over time or will require additional resources that the consumer be advised in writing and having this acknowledged by them. Email or SMS is perfectly sufficient for this purpose but remember to not accidently delete your SMS or their response!
Inventory, Inventory, Inventory
This is 1 area that is hotly disputed. Keep a total of the cost of your parts and the actual usage of those parts. If there is going to be a discrepancy in the cost because the price of a part has increased, document this clearly, let the consumer know and obtain their approval before proceeding any further.
Effective Payment Systems
Take the time to research effective payment systems. With so many options available on the market now for automated payments directly on your mobile, you don't have to wait to be paid. Try and obtain payment at the time of completing the job or send your invoice the very moment you leave the job site.
If your contract or agreement is well written, you should have a clause surrounding dispute resolution. Make sure that these terms suit you and your business. A qualified legal practitioner is best to help you here.
We understand that you can tick all of the boxes above and still come undone. If you find that your accounts receivables are out of control, please speak with us today to discuss your options to recover those debts.
Disclaimer: This article is general information only and does not constitute legal advice and is not intended to be relied on in any way.