Why not collect what’s owed to you?
I hear more stories from my peers about how hard it is to collect what they are owed. I cannot, for the life of me, understand why. I guess my background as a bill collector may have influenced my ideas about people who owe me money.
You cannot wait longer than 30 days to collect what is lawfully yours…if you do, you become a bank and that takes away from what we actually do. When clients go 31 days in my receivables I call them, I don’t care how big they are or how long the have been a client – none of that matters. Most of the people who I purchase services and products from want to be paid in 30 days. It’s actually 45-60 days for media and media firms have often told me that we are the best paying agency around. Don’t you think that helps when a sales rep is asked to recommend an agency? Who are they going to suggest: an agency that runs 90-120 or an agency that pays media bills in 45 days?
In order to pay your bills on time you must collect on time. Money owed to you that has gone beyond 30 days is a sign of disrespect. Don’t be afraid to call clients that owe you money. You further need to be willing to take them to court if they don’t pay – even if it’s a small amount. In most states small claims court will take cases of up to $3,000. The process is relatively easy and you don’t need a lawyer.
Okay, I understand when a client has a cash flow issue, we cannot be unsympathetic in those cases. When a client calls me in advance to tell me they have a cash flow issue I am more than willing to help them.
But my agency collects 98.7% of our payables on average, every month in 30 days. I know people think creativity is all that is important in this industry…but I will tell you I have seen some great creative agencies go out of business because they didn’t have the business sense to collect what was owed to them.