Q) My small business has grown over the past year, but with
the growth I also have more past due accounts. This is the first
year Ive had these problems. Am I doing something wrong?

Tom S., Boulder, CO

Dear Tom:

Theres an old saying If you dont have accounts receivables -
why not? I dont know enough about your billing procedures
to know if youre doing anything wrong, but let me start by
congratulating you on the increased growth of your business
in what was for many a very difficult year. Because you are
doing more business now you are experiencing the associated
aches and pains of having more accounts to worry about. Lets
look at some basic structure that lays a good foundation for
loss prevention.

Do you make your fees clear to the client before agreeing to
provide your product or service? Some people are uncomfortable
doing this and think it is counter-productive. Nonetheless, subjects
like price, payment method and other contract terms should be
covered up front. Make sure the customer understands his obligation
to you before you do business with him for the first time.

What does your contract include? Do you offer a discount for
quick payment? (Sometimes this is a good idea.) Do you specify
a certain number of days after which the account is considered
delinquent? Is there a clause that allows you to add collection
costs, attorney fees and interest if the bill becomes delinquent? If
not, those costs will come right out of your own pocket!

And when a bill falls into the delinquent category do you have a
procedure to follow? If not you should have such a procedure and
you should be sure to follow through on it. (Ill deal with this topic
in a later article.) Despite the delinquent accounts it sounds like
2001 was a great year for you. I wish you an even more successful
2002.