I get so many people who email me and ask me different questions about credit, debt collection, credit policies, procedures and so many things. So I thought I would post the top collection errors that I have found in my years of working with different companies. These are the things that people ask me about the most. If any of these are familiar to you or you find they happen to you, there are things you can do to change them, avoid them and stop them from happening.
1. No credit policy in place.
So many business owners do not have a credit policy for their business. When entrepreneurs open a business, they don't even think about a credit policy. When I owned my collection agency, 85% of my clients did not have a credit policy! That number is much to high, I am hoping to change that with my books.
2. Extending Credit to anyone who walks in the door.
I personally know of so many business owners who do this. They are so excited to make a sale that they don't check credit, or get any information from the customer. Then when the person never comes back or doesn't pay, they are at a loss of how to handle it or what to do. Don't let this happen to you!! have every customer at least fill out a credit application. I have sample credit applications you can use in my book "How to Help you Get Paid" and also in "Become The Squeaky Wheel, a Credit & Collections Guide for Everyone".
3. Receiving NSF or "bad" checks.
the most popular question I am asked is "I just had a check returned to me from my customer for NSF, what do I do?" Business owners need to be prepared for this BEFORE it happens. Make a sign to hang in your store, office, on your website, or at your cash register, post it on your invoices and statements. The sign should state:
- What you charge when a check is returned - the amount you can charge is different in every state.
- What will happen to the account if a check is returned,you might revoke credit or put them on a Cash only basis.
4. Not checking credit or references.
This is almost the same as extending credit to anyone, except these people will have the new customer fill out a credit application, but then just file it away. I can't stress this enough: "CHECK THE REFERENCES"
If you only do ONE thing instead of creating a credit policy, get a signed credit application and check the references. Never extend credit blindly. When is the last time you went into a store or tried to apply for a credit card or a loan and didn't have to fill out any paperwork? Never. Don't let that be you, your business depends on you to do this so it can maintain its cash flow and so you can be successful.
If you want to create a credit policy for your business or just have the forms you need for new customers, please check out my book "Become the Squeaky Wheel, a Credit & Collections Guide for Everyone" today. You wil be glad you did. 
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