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In business, it is critical to establish credit guidelines, policies and a review program for your accounts receivable. It is normal to carry balances from your vendors, but a business owner should have a clear idea of their aging reports to head off trouble from non-payment.
How do you know if this is happening? How do you prevent this type of behavior from ruining your business?
It's pretty simple, actually. You need to set limits. It is quite easy to let an account go too long and get in too deep if you're not on top of your collection efforts. That client who has been using you exclusively and keeping you busy may easily fall behind in payments leaving you holding the bag.
- Read notary forums and sites that report payment behaviors and issues of signing companies.
- Make notes of those who have a history of payment issues. If you choose to work for such a company, set a low credit limit. Don't let them use you for several signings before you find out the "rumors" are true. Those who don't pay have a great way of sweet-talking or making you feel guilty for heeding the warnings of their other victims. Don't fall for their tricks.
- Develop your own policy for granting credit. Never extend more than you're willing to lose.
- Review your aging reports at least monthly to identify suspect companies before finding out the hard way that you've been burnt.
Some would think that turning down work is foolish. There are those who take everything they're offered, after all, turning down work means turning down money. Not necessarily. A smart business owner will turn down work from a company that hasn't established a track record for payment. A smart business owner realizes that while it would seem they are turning down money, they may in fact be saving their time and resources from bad debt.
How do you recognize a potential non-payer? Are there warning signs to be aware of?
One tactic used by some companies is to pay when they get paid. While this may seem to make sense, your payment is then dependent on them receiving payment, their markup being sufficient to cover their overhead and them not being paid by another client.
Another tactic used by some companies is to book up your time quickly, by providing plenty of work in a short time frame -- typically before the billing cycle is established. By the time you realize they're late on payment for the first job, you've extended them too much credit and are out the cost of the work performed for them as well as the opportunity costs from turning down other work due to a full schedule.
A third tactic is harder to recognize. Some companies will start off the relationship by paying on time. Everything seems to be going well and you grant a bit more credit based on a good payment history. There is no reason not to accept the work, and there gets to be a greater volume from the particular company. All is well, until a payment is late, then another. Soon, they're not paying at all. This is the trickiest type to identify. But, if you're diligent with your accounts, it isn't long before the pattern begins to emerge and you can see that the account is going bad. Luckily, you've identified the problem before it grows into full-blown bad debt and all because you stay on top of your receivables.
By knowing your clients and establishing a payment history with them, your business can thrive. You will have more time to earn the money rather than chasing it.
Author: Melissa S. Haley, http://ctnotary.home.att.net Certified Notary Signing Agent
Views: 365
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This article is great for New and older experienced Notaries. I have found a way to keep my monthly signings in order as I do them and as I get paid. I use a simple Memo Holder (Stand up) and place the last months in the front and the current months in the back. As I receive the checks I make sure I staple the check stub to the paperwork and file it. I then make a point of going over all of the invoices around the 25th of the month and any that are not paid I call the company I have dealt with. None of them mind and several of them have thanked me for being diligent enough to call back as I have found a few that had not been closed out. These companies are run by humans and as we all know they can make mistakes also. I always try to remember to be polite and courteous. I have never been not paid for a signing.
