KANSAS CITY, Mo. – During the opening day of the annual American Convention of Meat Processors & Suppliers’ Exhibition, held in Kansas City July 15-17, attendees got tips from members of the American Association of Meat Processors on many facets of operating and growing their businesses. One breakout session, entitled “Small Business Collection Strategies that Work,” included bill-collecting advice from Jason Jennings, president of Jennings Premium Meats, New Franklin, Mo., and Reachel Beichley, senior counsel with the Midwest Research Institute, Kansas City, Mo.

A consistent theme of both presenters was the importance of publishing collection terms and details of payment responsibility on invoices, Web sites and order forms. Prominent placement of the information can prevent customers from claiming that they were unaware or never informed of the supplier’s policy when collection efforts are being made. The company’s policy for accepting checks and credit cards should also be included in the verbiage.

“The invoice should also state that the client will pay court costs and attorney fees if collection is pursued,” said Jennings, who encouraged attendees to establish terms and avoid deviating from those terms. One way to avoid collection issues before they arise is by accepting credit card payment, which eliminates billing altogether.

Collection action should begin after 30 days have passed without hearing from the customer after they have been billed for the products.

Once a payment is past due, Jennings suggested mailing reminder notices to late-paying customers on the first of each month and starting a paper trail, including keeping track of when notices were sent and details of any written or verbal correspondence. The next steps can include enlisting the services of a collection agency (which charge between 10 percent and 50 percent of the amount due) going to small claims court or hiring an attorney.

In his experience, Jennings says when he has taken a collection case to small claims court, the other party doesn’t show up and a judgment is granted to the company. “That doesn’t mean you receive payment,” he said, “but at least when you are attempting to collect, you’re armed with a judgment.” In many states, small claims cases have a $3,000 limit.

Beichley advised attendees to “be tough and don’t fall for hard-luck stories” during collection. However, successful collection sometimes means knowing when to quit, she says and reminded processors that their customers might be very nice people but if they don’t pay, they are not good customers. “They’re typically doing it on purpose,” she said. Beichley added that before a small claims case can be filed a demand letter has to have been issued and she distributed two sample letters to attendees. She also said hiring an attorney can be a solution if the costs, ranging from $2,000 to $6,000, makes sense. Even then, a lawsuit doesn’t mean payment will be made and additional costs may be incurred by the collecting company.