Here is a common question from entrepreneurs planning to open a startup. I’m not open yet, so why would I need a debt collection plan?
Unfortunately, unpaid debt can overwhelm your startup before you realize it has happened. With insufficient money coming in, you cannot pay your business obligations.
The trick is to address debt collection before it can become a problem. Here are three ways a new startup can minimize unpaid debt.
1. Establish a procedure
Before you accept customers, create an efficient invoicing and collections procedure. Often, this involves setting up a schedule for sending out invoices and following up to collect on them. In the early months of your business, you might perform these tasks yourself to save money or hire an in-house accounts receivable employee.
2. Try debt collection software
While not a fix-all solution, debt collection software could allow you to automate many of the processes involved in debt collection. For example, reputable applications monitor customer balances and send payment reminders automatically. Be sure to use a collections app created by trustworthy software developers.
3. Create a legal partnership
At some point, most businesses require the services of a legal professional. By creating an early partnership, you arm your company to address unpaid invoices and other debt swiftly. Perhaps even more importantly, you will have a knowledgeable individual who can perform the tasks associated with collections on your behalf.
Whatever collection option you implement, ensure it complies with Florida law and does not violate the rights of consumers. Otherwise, you could find yourself facing legal problems even though you only meant to get what you are owed.