Small Business Christian Debt Collection

A small business Christian debt collection policy is the first step in making sure that accounts receivables turn into money in the bank. The phrase, "accounts receivables," refers to money owed by customers to the company. Though most entrepreneurs don't go through the hard work of planning and launching new companies to become bankers, that is essentially what happens when credit is extended to customers. If a prospective entrepreneur finds himself in the enviable position of choosing between several possible business opportunities, he will base his final decision on which one to choose on several factors. One of those factors should be the extent to which accounts receivables are part of the prospective venture. For example, some companies do not provide any credit at all to their customers. The customer pays for the goods and services when the sale is made. But other industries will bill the customer. Until that bill is paid, the owed money is considered as part of the accounts receivable. The prospective entrepreneur should determine how much time he wants to spend on his small business debt collection efforts.

Small business development experts advise entrepreneurs and new owners to establish credit policies and procedures. These should be clearly written in procedure manual and then consistently followed. Many industries have a credit policies standard that the entrepreneur can use as a template for his own company. This information will probably be available through the industry's association and may even be found on the association's website. This information can help the entrepreneur develop a small business debt collection policy that fits customer's expectations for that particular industry, but also meets the specific needs of the entrepreneur's company. Part of the policy should include a credit application form for customers to sign. Here again, many sample forms can be found by doing a little bit of research. A provision regarding late payment fees can be included in the agreement as an incentive for customers to make timely payments. The federal Truth-in-Lending Act regulates how much interest can be charged for late payments and the laws vary in the individual states. The contract and/or credit application may also include a provision commonly known as a "deadbeat clause." This states that the customer is responsible for any legal fees involved in collecting an overdue bill. The entrepreneur may want an attorney to review his small business debt collection procedures manual to ensure that all state and federal laws are being appropriately followed before implementing the credit policy.

If accounts receivables are a normal part of doing business, the entrepreneur is well-advised to turn over this function to one individual who can be properly trained to handle it appropriately. Of course, as the business grows, the accounts receivables staff can grow along with it. But the important principle is to have specific people dedicated to this task instead of having a hodge-podge of employees who take care of collecting payments when they don't have anything else to do. This individual can also take care of running credit reports on prospective customers and checking references before credit is extended. Just doing these two tasks upfront may eliminate most overdue accounts. Credit can be refused to prospective customers who have a poor track record of paying their bills. Obviously, handling the small business debt collection function of the business is too important to the company's bottom line for procrastination or indifference to be allowed. As the Proverbs writer said: "Give instruction to a wise man, and he will be yet wiser: teach a just man, and he will increase in learning. The fear of the LORD is the beginning of wisdom: and the knowledge of the holy is understanding" (Proverbs 9:9-10). The properly trained staff will have an established monitoring system and the appropriate steps in place for effectively handling the accounts receivables function for the business.

Experts advise that the steps for collecting overdue accounts be specifically planned so that each contact becomes more assertive. For example, when an account is thirty days overdue, a friendly reminder may be all that's needed. The customer truly may have overlooked paying the bill and sending out a reminder will result in payment of the bill. The next step in the small business debt collection policy may be to send out a second reminder two months after the bill's original due date. This contact still needs to be professional, but may be more assertive than a friendly reminder. A third reminder may be scheduled for three months. For assistance in this part of the collection's policy, the entrepreneur or designated staff can find numerous sample copies of collection letters at online websites that specialize in these types issues. Small business development centers and local chambers of commerce may also provide helpful resources.

The most difficult decision is deciding when to turn overdue accounts to a small business debt collection agency. But here again, the decision needs to be made when setting up policies and procedures for handling the accounts receivables. This way, the staff knows exactly how to handle each account in an objective and fair manner; all customers are treated the same way. The entrepreneur should be sure that the collections agency that takes over his unpaid accounts is licensed and operates under the restrictions and limitations of the federal Fair Debt Collection Practices Act (FDCPA). Though this can be a difficult step to take, the entrepreneur needs to know when to cut losses. A client who doesn't pay is seldom a client worth having. By establishing clear procedures on accounts receivables before the business's first day of operation, the entrepreneur is demonstrating a commitment to the venture's success. As a review, all policies and provisions regarding late payment fees and legal fees should be included in a customer's contract and credit application. The small business debt collection manual should indicate the appropriate steps for collecting on overdue accounts so that the properly trained staff can monitor the accounts receivable in an orderly and productive fashion.

Christian Business Debt Financing

The issue of business debt financing is a crucial one for any entrepreneur who wishes to start a new business or to help an existing venture grow and flourish. Entering into any area of industry, large or small, will always involve a certain amount of capital. Most companies do not have sufficient cash on hand to accomplish all of their goals and make a successful entry into the world of commerce without attaining a loan. This is not a sign of weakness, but rather a fact of life in the business world. Attaining business debt financing from an independent source such as a bank or other lending institution means that a company is able to plot their own destiny. When interested parties or financial backers furnish a part of a company's operating capital, that backer will most likely require a certain amount of oversight into the policies and procedures that are put in place. Avoiding this kind of external interference is very important for many entrepreneurs. There are also certain tax deductions that may apply when a company borrows money from a conventional source. An unfortunate downside to taking on debt for business purposes is that if the company should fail, the borrower will still need to pay back the debt. Repaying this indebtedness without the benefit of any income that the company might have generated can prove to be difficult if not impossible.

For small businesses, the choice between taking a traditional approach or to obtain funding in another way is always an option. In addition to obtaining funds from a conventional lender, there are other solutions available including equity and hybrid financing. Equity lending involves borrowing from investors or pulling money from an entrepreneur's personal savings and using it to invest in the company. Small business debt financing might involve taking out a short term loan that will be paid back in six months or less. Loans that involve longer terms are often used to pay for assets such as equipment or the renovation of property. In addition to short or long term loans, lines of credit can also serve as a solid supply of capital. The line of credit allows the borrower to draw out funds on an as needed basis. In the event of unexpected expenses or a sudden crisis, a line of credit can come in very handy for small companies. As a company grows, the ability to pay back business debt financing should grow as well. Lending opportunities for small companies are not limited to just the traditional loan. There are also credit cards that are specifically geared toward the needs of smaller industry and commerce concerns. Some businesses utilize these charge accounts in lieu of other borrowing options.

Credit cards may not be the wisest choice in the area of business debt financing due to the high interest rates. But as a convenient way to handle day to day needs, credit cards can work well as long as the balance is paid off each month. For many start up companies, conventional loans are not an option. The requirements that must be met before funding can be approved are often too stringent for new businesses to meet. For this reason, many new companies are dependant on the personal funds of the owner for capital. A major benefit of this approach is that the entrepreneur who supplies their own funding will also retain all ownership and equity. For many entrepreneurs, hanging on to a full time job until the company gets off the ground is a necessity. Ironically, after a small venture has begun to pick up speed, opportunities for business debt financing tend to increase. This is because the perceived value of the new company has improved. The Bible talks about the value of the love of Christ. "And to know the love of Christ, which passeth knowledge, that ye might be filled with all the fullness of God." (Ephesians 3:19)

After a business has been in existence for a while, debts that have accumulated may come in the form of several different loans. If this is the case, handling business debt financing through loan consolidation may be a viable option. Lower monthly payments are just one benefit of this approach. The availability of extra capital each month can open up new possibilities for success. By consolidating indebtedness, many companies find that they are paying lower interest rates and can obtain friendlier lending terms. Loans that are taken out using a company's assets as collateral can also supply needed capital. Secured debt such as this does have its drawbacks. In the event of a downturn in business, the assets that are serving as collateral will be put at risk. Some lending institutions also offer funding that involves a revolving credit approach that uses the company's assets as collateral.

Established Christian businesses often have succeeded at handling any issues concerning start up funding. These companies may be moving along smoothly, having met prior goals and having reached a level of stability. At this point, the business's main priority could involve attaining funds for growth. This type of business debt financing dilemma generally involves a whole new set of problems than when the venture was in its infancy. Promoting growth while meeting daily capital needs can be a challenge. Whether the need is for an expansion of current facilities, moving into a more global marketplace, or making necessary updates to existing infrastructure, finding suitable financial solutions can mean the difference between real growth and stagnancy. Collateral loans need not be based on physical assets only. When a company has a number of outstanding purchase orders or other income generating activity, these things can function as collateral for funding as well.





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