Although there are general guidelines you can follow in collecting past-due accounts, you will need to modify those guidelines to fit your particular needs. Here's a look at the most important factors you'll need to consider when modifying the general guidelines.
Your relationship to the debtor. If you decide to collect your past-due accounts aggressively, such as by having a lawyer write a letter for you as soon as the account is past due, you may have to take a less aggressive approach for certain customers. You may have to ease up, for example, on personal friends, customers with whom you work especially closely, or particularly important clients. If you have a single customer who provides, say, 80 percent of your business, it hardly makes good business sense to threaten him with a lawyer, especially if he can obtain what you provide elsewhere. (Of course, if that customer isn't paying any of his bills, you may have no choice.)
Reasons for nonpayment. Your tactics should also be modified to reflect the reasons why your customer has not paid your bill. If your customer lost the bill while moving to a new office, and would pay it if he had it, you don't want to risk alienating him by threatening him with a lawyer. On the other hand, if your customer's reason is unsatisfactory ("I just didn't feel like paying it."), you can dispense with the niceties and become even more aggressive. These examples illustrate one of the big advantages of personal visits and telephone calls over letters. With a personal visit or a telephone call, you can more easily find out from your customer why the bill hasn't been paid. (For other hints, see collection tips.)
Your financial situation. If your cash flow depends upon a particular
customer paying his bill promptly, you may have no choice but to be aggressive
right from the start, even with your most important customers. After all, what's
the point of not offending your customer if his failure to pay you causes your
business to go under?