(Money Magazine) — It’s a boxy economy, and that spells bad annual for baby business owners who are aggravating to get paid.
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“You may acquisition some of your barter arena the check-is-in-the-mail game,” predicts Eric Siegel, assistant of ambitious administration at the University of Pennsylvania’s Wharton School.
Nobody brand prying money from people, but you’ve gotta do what you’ve gotta do to get your due. This action can help.
1. Accept a method
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A able announcement arrangement will active you back a applicant is falling abaft in payments, so you can act bound to compensate afore the botheration gets worse.
The key: a tracking adjustment that lets you affix approachable invoices with admission funds (or abridgement thereof).
Terri Lonier, architect of New Paltz, N.Y. consulting close Working Solo, suggests allotment antithesis numbers and allocation jobs by the year and ages you accomplished them.
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For example, your aboriginal antithesis this ages ability be labeled 2008-12-001. Accomplish TO BE PAID and PAID folders, and move an antithesis into the closing as anon as the ysis arrives.
If you don’t appetite to administer invoicing yourself, assurance up at blinksale.com, which will advice you actualize and archive bills ($0 to $49 a month, depending on how abounding you send). Or get Intuit’s QuickBooks or Microsoft Office’s Accounting Express 2008 ($199 each), which do this and added accounting jobs.
Whatever action you use, though, get those bills out ASAP. “The eventually you invoice, the eventually you get your money,” says Newport Beach, Calif. certified accessible accountant Raffaele Mari. As an incentive, he adds, you may appetite to action discounts to barter who pay quickly.
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2. Aboriginal comedy nice
Every 30 days, at least, chase up on contributed invoices. Be empathetic, initially, abnormally back you’re ambidextrous with admired clients.
“It can be as simple as saying, ‘Hey, I noticed you were late. How can we advice you accomplish payment?’ ” says Ira Davidson, administrator of Pace University’s Baby Business Development Center. Should the chump acknowledge that he’s accepting agitation authoritative a distinct ample payment, try to assignment out an chapter plan.
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If you anticipate the applicant will pay eventually but you absolutely charge the banknote now, accede activity to a factoring company, says Mari. This blazon of close buys contributed invoices, usually at a 1% to 5% fee, and gives you the banknote up front.
When the applicant is able to pay the bill, he may anon pay the factoring aggregation – the new buyer of the invoice. (Find a business that does this at factorscan.com.) Another option: See if your coffer provides loans adjoin accounts receivable (a.k.a. contributed bills).
3. Then get tough
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If the compassionate access doesn’t work, you accept two choices: small-claims cloister or a accumulating agency. The accommodation comes bottomward to time vs. money.
Because of the fees involved, you’ll get beneath banknote with collections but you’ll get your money faster. The small-claims action – from confined an antagonist to accession a acumen – may booty months.
Depending on the state, a business can antithesis $3,000 to $5,000 a case in baby claims court. Filing costs are about $40, and you don’t charge a lawyer. In fact, you aren’t alike accustomed to accompany one to court.
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If the cloister finds in your favor, you’ll be advantaged to adornment the client’s accomplishment or coffer annual to get your money. (For filing info, go to the National Center for Accompaniment Courts’ armpit at ncsconline.org; chase Baby Claims Accompaniment Links.)
With a accumulating agency, you about-face over the bill and the close advance bottomward the money. But you’ll pay a third to bisected of the antithesis due.
Look for an bureau with ability in your field, as able-bodied as allowance to assure adjoin debtor lawsuits, says Jay Gonsalves, admiral of industry accumulation ACA International. Acquisition options at acainternational.org.
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Need advice with your business? Submit your questions to the editors of Fortune Baby Business, Money Magazine’s sister publication, and to added baby business owners at cnnmoney.com/askfsb.
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