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Accounts Receivable
COLLECTING DEBTS
Preventing Payment Problems
Edward Jacobson: You are a Contractor and you have a lot of time, money, people invested into that job, and that customer doesn't pay you. Well, it's going to have a potentially devastating affect on your business.
Eliot Wagonheim: One can't untar a driveway or unprint a business card; you've got to look to your customers, your patients, your clients to actually fulfill their contractual obligations. And that means, you have to be able to get paid.
Edward Jacobson: Business owners should almost play bank sometimes. You should be looking at your customers and just saying, is this the right customer for me?
Eliot Wagonheim: You want to take certain information from that prospective customer. That information can talk about where they bank, where they are employed, assets.
Edward Jacobson: Request a credit report. Get some references on that business. Just don't be so happy that the business came at the door be a little discriminate.
Eliot Wagonheim: The second part is, what rights have you given yourself in the contract? Signing a contract that says, "They are obligated to pay me $1000." That's a lot different from signing a contract that says, "They are obligated to pay me $1000." And if they don't, interest at the rate of X per month or per year will accrue on any unpaid balance. And if I have to go to collection that customer is also responsible for my attorney's fees. The contract has got to say that payment is due at X day or upon delivery of Y materials. There's got to be a benchmark that says I have earned my money, because that's when the clock starts ticking if you have interest. And that's when you are able to go to court and say, "This balance is overdue. I fulfilled my contractual obligations and this person did not fulfill theirs, because they didn't pay me on time."
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