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What are your choices when your accounts receivables reach 60 to 90 days past due? After all, cash flow is a paramount priority.

Stellar debt collection is all about emotions. Certainly, you don’t want to be too aggressive in debt collection and lose possible revenue from slow-paying customers – they might soon be able to pay you.

Even a court judgment isn’t a cure-all. Nor do you want to let your receivables cripple you.

Many businesses face this headache – even in our expanding economy with renewed business and consumer optimism.

But consider that patience, psychology and resourcefulness will ease your debt-collection nightmare.

It will help you to understand the history of four salient issues:

1. Tight lending credit with small banks has traumatized business. Many of your business customers can’t get credit from their small banks. For countless businesses, the credit issue started with Advanta and continued later with the resulting Dodd-Franks legislation.

Advanta was once the nation’s 15th-largest credit card company with about 360,000 small-business customers.

It declared bankruptcy in Nov. 2009 – five months after it cut off all credit to its customers. Advanta CEO Dennis Alter was quoted by CNN as claiming the economy hurt his company (Bankruptcy filing is a blow to small business).

That’s partially true, but there was plenty of evidence to the contrary. Advanta and other credit card companies helped create the Great Recession.

Advanta was repeatedly accused of bilking countless customers with predatory interest rates at higher than 30 percent for dubious reasons, and abruptly cutting credit lines without warning to unsuspecting businesses long before the recession was acknowledged by economists. 

Little wonder about Advanta’s downfall. Its business customers couldn’t pay their credit card bills and bitterly complained regulators about Advanta’s behavior. 

2. Weaker sales and fewer exports. The red ink cycle in the gross domestic product is over. GDP growth has started under the Trump Administration.

But the trade imbalance was a major catalyst for the steel and aluminum tariffs.

3. The national debt. Federal-government debt under the Obama Administration as a share of the nation’s GDP averaged 76 percent. So despite a stronger economy, more progress is needed.

The nation’s massive debt of about $21 trillion increases every split-second.

4. Mounting healthcare costs. Employers have suffered from double-digit percentage increases. And the root causes of escalating healthcare costs were exacerbated by ObamaCare. 


The first solution for delinquent receivables is to assess your invoicing practices and to make necessary improvements.

Next, for many of your customers, consider using the Golden Rule and train your staff in empathy techniques.

Many slow-paying customers might be downtrodden, but not mean-spirited. If a slow-paying customer has an otherwise good track record with you, the odds are you’ll see your money as the economic conditions improve – if you practice empathy.

Empathy means a breezy, easy-going approach. Treat past-due accounts like you’d want to be treated. Ask friendly, open-ended questions to get your customers to talk with you. Listen to how they hope to repay you.

Case study

Admittedly, in my third year in business, I fruitlessly felt anger toward a client delinquent on a $4,000 invoice who didn’t follow my counsel and his company consequently fell on hard times. As I dragged my bag of resentment around, it grew bigger and bigger. My obsession was a drain on my emotions.

Fortunately, I remembered a passage in an old best-selling paperback book, “Love Is Letting Go of Fear,” in which author Gerald G. Jampolsky, M.D. (The AH International Team – Attitudinal Healing International), related his experience with a non-paying client.

Dr. Jampolsky, who was angry over the nonpayment, changed his mind and used a new go-slow empathetic approach to the problem.

But that wasn’t his motive for an easy-does-it approach. He did it for his own serenity. Soon, he unexpectedly received payment.

Tired of being frustrated with the client who owed me more than $4,000, I decided to try Dr. Jampolsky’s approach. I decided to let go of the problem after being unsuccessful after months of collection efforts.

To my surprise – a year later – I got a phone call with a promise to pay in full. Yes, the check arrived three days later and it didn’t bounce.

Two other lessons

Two other best-practices to avoid problems with your receivables:   

  • Don’t be so eager in taking on new clients, and be certain to practice due diligence. I politely turn down new businesses as clients if they’re not a right fit. There are  steps to consider before turning down new business
  • Closely monitor clients’ progress. Even if they pay me a retainer, I hold them accountable if they ignored my suggested best-management practices. In my experience, they won’t succeed if they don’t follow recommendations.

FYI, five years after my $4,000 surprise, I got an opportunity to see if I indeed learned my lesson in empathy:

As I was turning into a parking lot to meet buddies for our weekly sailboat race, a young waitress with a small child rear-ended my late-model vehicle. The damage was slight – about $100. The driver begged me not to report it and promised to reimburse me. I agreed.

Soon, I realized the joke was on me – she was not in a position to pay – so I decided to let go of it. My loyal accountant was more than chagrined with me.

But just an hour after deciding to let go of the matter, I unexpectedly ran into a person who formerly worked for one of my clients. He mentioned to me how my work benefited his ex-boss, and asked me to approach his new employer to offer my services.

A week later, I had a new client, who became my biggest. It was a healthy six figures a year in revenue for five consecutive years. Meantime, my accountant became amused by my chortling.

The moral: Treat each situation differently. What goes around, comes around.

Don’t ignore your receivables

However, this doesn’t mean you should ignore collection problems. But don’t approach each customer with a sledge hammer. See the situations as opportunities for growth and more options for due diligence.

In conclusion, think long-term. As much as possible, treat your customers as partners and use the Golden Rule – treat others as you would like to be treated if you were in a similar plight. What goes around comes around.

Besides, if you use due-diligence in communicating with customers early on and use best-practices in management, you’ll be OK. The odds are the majority of your delinquent customers will remember your empathy and will remain loyal after their situations improve.

From the Coach’s Corner, here related resources:

4 Best Practices to Refinance Your Business Loan — Would you benefit by refinancing your small business loan to get a better interest rate and lower loan payments? Certainly, you would benefit from a lower interest rate and loan payments if you have cash flow issues. But there other matters to consider before refinancing your loan.

Applying for Bank Loan? Here’s How to Shorten the Process — Business owners generally have two concerns when trying to get a bank loan or line of credit. Either they can’t qualify or they face scrutiny beyond belief. Wouldn’t it be great to save time and shorten the process?

5 Tips to Build Your Business Credit, Access Capital — Sometimes a business needs access to capital to grow. But in order to grow, it helps to build credit profiles to land financing.

Plagued by Chargebacks? 5 Ways to Fight Back — Increasingly, merchants are being victimized by chargebacks in illicit of behavior credit-cardholders. To avert being victimized by such fraud, here are five key steps.

Key Measures to Prevent, Recover from Ransomware — Published reports indicate ransomware cost businesses $350 million in 2015. The FBI considers ransomware attacks one of the three worst cyber threats.

“Interest on debts grow without rain.”

-Yiddish Proverb



Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry. 

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