The Complete Guide to Invoicing for Small Businesses
Collections basics for small businesses
Collections start with clean invoices and documented terms. Escalate in layers: reminder, call, plan, third party. Consistency beats sporadic aggression.
Prepare the file
Gather contract, change orders, delivery proof, and every invoice and payment application. Note disputed vs undisputed balances in writing.
Phone calls that move money
Ask for AP directly. Confirm receipt issues versus cash issues. Offer short payment plans for good faith partial pay—document them.
Third parties and legal
Factor or collection agencies vary by industry and cost. Legal demand letters have rules—consult counsel before threats or reporting to credit bureaus.
Collections FAQ
- When to write off?
- When collection cost exceeds realistic recovery and documentation supports the decision—your accountant can guide tax treatment.
- Payment plans?
- Get signed acknowledgment of total due and default terms if they miss an installment.
- Consumer vs business debt?
- Consumer collections face stricter laws—verify scripts and hours of contact.