There are four easy ways to avoid or manage business debt as an entrepreneur.

The first step is easy- be cautious and realistic. For example, if you’re working with someone who should be paying you, and they don’t, cut ties with them.  If they miss a payment once, they’re liable to do it again. Don’t let these things slide, work with someone you can count on.

If you offer a service, your customers should pay for whatever service you do for them.  That sounds so simple doesn’t it?  Many customers will take your services for granted and not pay, or just stop coming to you all together.   At this point you should break out the bribes.  Start offering your recalcitrant clients  benefits to paying, make them want to pay. For example, you may offer a discount if they pay for your service by a specific due date. When customers are met with an offer and benefit, it helps them pay and helps your business flourish.
What happens when customers don’t pay you and remain indebted to your business?  They need to be reminded. Send them a letter of demand. In this letter, recognize that they are in your debt, with compassion, then, break it to them- they are instructed to pay X amount of money within Y amount of days.
This last step if a customer remains in your debt, even after your reminder and demand letter to them is to step up your game. Daily phone calls, face-to-face meetings, and assertive talking might just do the trick. However, if all else fails, turn to professionals. Debt collectors and debt collection attorneys can handle the case from there on out. It may seem dramatic, but debt collectors work to extract payment for debt from a debtor, which, in this case is your customer.  Give a debt collector or debt collection attorney and notify the customer of your actions.  Every entrepreneur should have a relationship with a debt collection professional before they need their services.  Like an accountant or any other business professional, debt collection professionals can make the difference as to wether or not your entrepreneurial venture has the cash flow to sustain itself.
Debt can break your business.  Don’t let past due clients slide.  Assert your authority, and be wise with who you do business with.
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