Starting your own business requires a number of steps. Of course, each business will have different needs, but each successful business will require a system for collecting money or profits. If a business has no income and no way of collecting payments due for their provided services, they will soon find themselves out of business. A Collections Management System or a Commercial Collections Department handles the money for a company, and usually encompasses many small business needs related to collecting money. A commercial collections department takes charge of managing accounts receivable, billing clients, and collections of all payments.
Establish Payment Methods
Creating an easily duplicated and regulated system for your clients to pay for received work or products will be essential to starting your commercial collections department. Some of the most common forms of accepted payments in the business world include:
- Personal or Business Checks
- Personal or Business credit and debit cards
- Online payment methods such as PayPal
- Payment plans established between your company and the customer
- Other external payment sources, such as insurance companies
A business that is flexible enough to accept multiple types of payments will benefit their customers by providing them with choice. This may also help a customer keep current with their payments. Make sure to research any fees that you or the customer will incur with any of the payment methods mentioned above. Factoring fees into a transaction will help a business remain profitable.
Set Up Payment Processing “Rules of Thumb”
After you have determined what types of payments to take, you will need to set out some rules for your employees regarding the acceptance and handling of these payment types. For example, what are your rules for accepting checks? Must they be business checks? Do you need to verify their ID? Do you perform credit checks on new customers? When do you allow customers to set up a payment plan? All of these procedures should be laid out for your employees so a smooth commercial transaction can occur with your customers.
Send out Bills
Notify your customers of any money owed. By sending a paper record at least once per month, you’re not simply being polite; you’re better prepared for any future collection attempts.
Establish a commercial collections process for late payments
For customers who do not pay within a reasonable amount of time (as determined by your “rules of thumb,”) initiate commercial collections proceedings. There are federal and state laws that must be followed when attempting to collect a debt from any customer and consultation with a commercial collections attorney will help avoid collections violations.
Contact the experienced commercial collections attorneys at Smiley Law today for professional assistance in setting up a collections department for your small business.