Recently, we’ve been talking about increasing sales, reinforcing branding, reducing costs, and other ways to survive a rough economic year. Another very important strategy to keep the cash flowing is debt collection.

Debt collection can literally make or break your business. Failing to follow up with debtors regularly could make you end up with zero in the bank. It’s a fact that the older a debt becomes, the harder it is to collect.

It’s vital that you create a process for dealing with debtors and stick with it. The more you enforce this, the quicker clients learn to stay within your terms of trade.

Here are seven tips to avoid the debtor drama:

Tip 1: Accept plenty of payment methods
Five years ago, just about all of my clients paid by cheque. Now, cheques would account for just 5% of our receivables. The majority of our clients pay by direct bank transfer, which is better for us: the money is available quicker, and there’s less risk of a bounced cheque.

We also have some clients who pay by credit card. Sure, we take a small hit on the fees, yet we find many clients are keen to pay by credit cards to solve their own short-term cashflow issues. Speak to your bank or find a payment gateway for safe credit card transactions.

The more payment methods you offer debtors, the less excuses they have to neglect paying.

Tip 2: Ask for a deposit up-front
I’ve always asked for a minimum 40% of the project total as a deposit before starting work on a project, and rarely does a client complain. Asking for a deposit up-front means that you’re establishing the client is serious and can pay their bills. If they’re unable to pay the deposit, how will they pay for the rest of the project?

Tip 3: Spell out terms clearly and regularly
Be sure to include your payment terms within your proposals, and that the due date is clearly marked on all invoices. I know a person who even sends meeting requests as calendar reminders to their clients when they send the invoices.

Be very clear with due dates — make the date as large and as bold as the total on your invoice.

Tip 4: Follow up immediately
The day after your invoice was due is the best time to send a polite, yet firm, email enquiring when they expect to pay, and if there’s any issue. Include a copy of the invoice as an attachment, and let them know you’ll call in a few days time if you don’t hear from them.

Set the tone carefully though; you want to sound helpful and genuinely concerned they may have misplaced the invoice, rather than threatening or angry.

A week later, if the payment is still yet to be received, call and ask them when they expect to pay. This way, you’re forcing the client to declare a date, which they’ll be less likely to break. Follow up with an email, confirming the date you expect to receive the payment.

Tip 5: Increase the pressure
Close the cycle. As the debt becomes older, follow up more frequently. Become firmer with each communication, but never become angry or personal. If you host the web site, consider turning their site off until payment is made, or hold back on code or any deliverables that you still have.

Tip 6: Offer repayment schedules
If the client is having genuine trouble paying you, call and discuss a workable payment plan. Of course, it’s preferable to have the entire balance in your bank instead, but it’s still better than receiving none of it. Be sure to put the schedule in writing, and follow up on every payment to ensure it’s adhered to.

Tip 7: Find a good debt collector
If the worst happens, and two months later you’re still without payment, you may want to hand the matter to a debt collection agency. These agencies often take a small percentage of the overall debt if they can collect it, so at least you’ll receive the majority of the debt.

Good luck, and here’s hoping it’ll be unnecessary to resort to any of these tactics!

This post first appeared as part of Issue 440 of the SitePoint Tribune, a very popular email newsletter that I am co-editor of. Thanks to SitePoint for allowing me to reproduce the work here.

It’s personally gratifying for me to read the comments on posts and articles (as well as the recent calls, emails, etc) I have previously written about the fine line of ethics in business, particularly in the web industry, and read so many other industry players agree with me on what’s right or wrong.

I have had my fair share of debate as well; sure, it’s easy for me to say what I believe is ethical and what isn’t, and that it isn’t a definitive line, and I am publishing what I think is right or wrong. As far as I am concerned, that’s the point. It is MY personal view on what is ethical and what’s isn’t, or what is in the grey area in-between. Sure, there’s no list of boundaries and that it is my personal view, however I like to believe with twenty years of business management and ownership in various forms, I can speak from my own personal experience.

Let’s be frank here. I would never steal someone else’s design and call it my own. I wouldn’t use competitors intellectual data or client lists for my own advantage, I wouldn’t advertise using AdWords and specifically target searches for competitor business names or trademarks. There’s a stack of other things I also wouldn’t do, yet I haven’t written about.

The responses from my most recent two posts have inspired me to work further on the idea of an opt-in code of conduct, something I have been discussing and thinking about for a few years now. If I did start to facilitate a list or a code or whatever we call it, and open it to peer review, do you believe it would be worthwhile? Would you consider be involved in guiding it? Would you even consider adopting it?

Be keen to hear your feedback – shout out in a comment below…

I’ve been involved in the Perth web design industry for 15 years now, and have often referred to my business, Bam Creative as a Perth web design company. That’d be correct; we’re based in Perth, Western Australia and we offer web design and web development and other associated services.

A cursory glance at a number of other websites of Perth web design businesses, shows that the phrase ‘Perth web design’ appears on nearly all of them. Bam Creative certainly has used this phrase since we started in 2002.

So it came as quite a surprise to me, when I was alerted to the fact a local company has applied for a trademark on the term ‘Perth web design’. In fact, they only lodged the application last month, on the 20th December 2010.

Now, I’m no trademark attorney, but in my humble opinion, it seems somewhat far-fetched that an application for such a generic phrase could be accepted, however we all know that law and reality don’t always see eye to eye.

On this information page on IP Australia, it states that…

Types of trade marks that are difficult to register
A trade mark that describes your goods (eg. radios) and services (eg. electrician). It must not be a sign that other traders may wish to use to promote or describe their goods and services, nor can it mislead the public about the nature of your goods and services.

It is also very difficult to register a geographic name or a common surname as a trade mark, however, someone who has used one extensively for a considerable period of time may be able to achieve registration.

Given that the application is for terms that describe services, as well as a geographic location, I would imagine that this would get rejected, however it sure is an interesting case, and I for one will be watching it closely.

Searching the IP Australia ATMOSS database of lodged trademark applications, you’ll see that application 1400795 is applying for the term “Perth web design” as a trademark, in the class of web portal services, which includes designing or hosting of web sites. (The easiest way to search is to ‘Login as Guest’, then use the second search box, and enter the application number 1400795).

The application is currently at a status of ‘Indexing Approved’, which simply means it has been added to the database. The next step from here, is for the examination to be undertaken, before being accepted and published for the opposition period of three months.

If you are involved in the Perth web design industry, and keen to oppose this trademark application, should it be required, then there is a Guide to opposing registration of another person’s trade mark available on the IP Australia website, along with a number of other guides.

I’ll post an update to the application when it has moved through the appropriate processes…