Too many business owners have a difficult time getting paid for their work because they hate to ask for money—even if they’ve already earned it.                 

“Human nature is part of the problem,” said Keith Lilek, CEO of A/R Allegiance Group, an Overland Park company that has helped clients collect more than $500 million in receivables. “Human nature suggests that we don’t like conflict, and we perceive asking for money as conflict.”

It’s a mental block that entrepreneurs must overcome so they can generate the cash flow their company needs to succeed.

Remember, you’ve delivered a valuable product or service, and the client has benefited. Don’t be afraid to stand up and ask for what’s yours.

“There’s limited future in being a weenie,” Lilek said.

Ground Rules for Payments

Having a clear payment policy—and sharing it with customers—can help you avoid some of the most common problems with late receivables, Lilek said. By letting everyone know what is expected, you establish the ground rules for how the transaction will work.

Rule No. 1 is to get paid up front as much as possible. When you’re talking about tens or hundreds of dollars, that’s relatively easy.

That’s not always an option, especially when billing a customer for tens of thousands of dollars. In those cases, you need to investigate your customer’s track record before you deliver $20,000 worth of goods and services.

Pull Better Business Bureau records, look at credit reports, seek bank references—do whatever is necessary to verify that a client can be trusted to pay you for your work.

Also, train everyone in your business who comes in contact with customers to ask for payment, from the billing department to the delivery drivers.

Bill Early and Often

The billing system is the next piece, Lilek said. Send the bill as soon as possible, and as often as necessary. Most companies mail bills via the U.S. Postal Service, but don’t overlook other forms of communication, such as a phone call or an email reminder. By showing persistence—and letting wayward customers know that you take their account seriously—you increase your odds of receiving the money you deserve.

Be careful about cutting deals with nonpaying customers. A lot of times, Lilek said, a small business will make a sale, perform the work and still have to negotiate over the price because the customer refuses to pay. To receive any money at all, the company often will accept a percentage of what it’s due.

That’s an incredibly bad habit, Lilek said, because it trains other people to be bad customers. “You’re penalizing the good customer for paying early,” he said. “And the bad customer gets all the deals.”

If all else fails, it might be time to get outside help from a lawyer or a collection agency, Lilek said.

Whatever you do, don’t turn your back on overdue accounts. Fight for what you’re owed.

“It’s the difference between staying in business and going out of business,” Lilek said.