4 Ways to Establish an Effective B2B Collections Strategy
Small business owners often work with other businesses in the course of their daily operations. These B2B relationships may include suppliers or distributors, accountants, marketing firms or consultants, to name a few.
It can be a tricky situation when a business falls behind on payments to another business. In fact, many businesses rely on each other for their business to operate successfully. So, it is in the best interest of all involved if disputes are kept to a minimum. One way to maintain strong B2B relationships is to establish effective billing and collection procedures.
Smart B2B Collections Practices
- Give clients multiple payment options – The more ways a client has to pay their bills, the better. That’s why offering as many payment options as possible can help to ensure prompt payment for your B2B clients. For example, give businesses the ability to pay with a check, credit card, ACH payment, wire transfer or an online platform such as Venmo, Stripe or others like it.
- Send multiple payment reminders – A missed payment may simply be an oversight. In those cases, a payment reminder may be all that is needed to bring an account current. Some clients may need a few reminders, however, so a good strategy is to follow up with past-due accounts on a set schedule that works for you. For instance, you might start with an email after 7 days. Then, perhaps a phone call after 15 days. This method gives the client a chance to speak directly to you, in the event they have a question about the invoice. In some cases, a legal notice may be necessary after several prior attempts at collecting the debt. An efficient, automated payment tracking system can quickly keep track of late payments and send out notifications as needed.
- Enforce penalties for late payments – It is important to establish clear penalties for non-payment with your B2B clients. And even more important, you must actually enforce these penalties if your client falls behind on a payment. Unfortunately, many clients will be more inclined to skip a payment if they know there will be no repercussions. Therefore, strictly enforcing a late fee penalty can help to avoid continuing problems.
- Make sure business contracts are carefully prepared – In order to ensure prompt payment of business invoices, it is essential that your business contracts state the payment terms clearly. These contracts should provide the details of payment due dates, grace periods, how late fees and penalties are calculated and applied, and methods of payments accepted. This way, clients will know up-front what is expected in terms of payments and there should be no surprises when they receive their invoices.
Work with an experienced B2B collection litigation attorney
Sometimes, even with your best efforts to avoid it, legal action becomes a necessity. In that case, an attorney who is experienced in B2B collections can be the best option to resolve the matter. If a claim escalates and litigation is necessary, the attorneys at Churchill, Quinn, Hamilton & Van Donselaar, Ltd can provide the support you need to successfully recover money owed to you. Our firm’s experience and expertise enable us to quickly determine the best course of action in litigation and to aggressively follow through.
Contact Churchill, Quinn, Hamilton & Van Donselaar, Ltd at 847-223-1500 to learn why we are well-known in our community as respected business attorneys with a strong reputation for expert counsel. We will support your business to help you to avoid collections issues by preparing detailed B2B contracts, ensuring that included late fees and penalties adhere to state laws, as well as advise on the most effective collection strategies. And when necessary, we will provide expert representation in court to negotiate your collections claims.