1. Get it in Writing

The first thing you need to do is get your agreement in writing.  Use a construction contract; it will be much easier to prove your point in court than relying on some type of verbal agreement based on a hand shake.

2. Secure Your Payment

Next, you need to secure your rights to be paid with some type of legal instrument.  Whether it’s a construction lien on real property or a UCC on materials; it’s critical that you secure your right to be paid.
3. Bill Regularly

The worst thing that you can do is send bills sporadically.  Your customers need to know you’re serious about getting paid and they can set their watches on the bills that they receive from you.

4. Limit Your Credit Risk

To the extent you can limit your exposure by limiting the credit you give, you should do that.  It’s much easier to suffer a loss of $5,000 than $50,000.  You need to make credit decisions based on the credit risk of the customer.

5. Contact Delinquent Accounts Often

So you have a delinquent account; what do you do?  Yes, you must do the obvious – contact the account holder.  Do it verbally and in writing, nicely and firmly but do it, and do the best you can to get the customer to start paying you.

6. Resolve Disputes Quickly and in Writing

Sometimes your customers will tell you that the goods arrived late or that they are unhappy with your service. Try to resolve these issues yourself.  Better to give a small credit in exchange for a payment, and move on.

7. Negotiate with Decision Makers

Whenever you’re negotiating either the contract or a delinquent debt, make sure you’re negotiating with someone that has the authority to make decisions.  Avoid the frustration of negotiating with a bookkeeper with no real authority.  Deal with someone who can actually move the ball forward.

8. Condition any Credit on Prompt Payment

After you decide that you’re going to provide a credit in exchange for an immediate payment, make sure that that condition is expressly set out in a written agreement (can be an email).  The last thing you want is to give a credit and then keep waiting on a promised payment.

9. Don’t Delay in Initiating the Legal Process

Once you determine that there’s nothing more you can do yourself, don’t wait to enforce your legal rights.  Get to your lawyer ASAP.  Every day that goes by makes it that much harder to collect the debt.

10. Avoid Emotional Decision Making

Leave your emotions at the door when you deal with credit issues; it makes resolving a business dispute much easier.  The same applies in collecting a debt.


If you employ all of these 10 debt collecting strategies, you’ll likely see your cash flow increase and your frustration level decrease.