Don't Get Stiffed Use these 4 simple steps to make sure you get paid.

More than 43,000 businesses filed for bankruptcy last year, according to data from the American Bankruptcy Institute. Michelle Dunn, a 20-year veteran of the collections industry and author of seven books on the subject, has seen her share of companies go belly-up from losing thousands of dollars, some from their biggest accounts.

"Most business owners were hurt that their customer stiffed them and confused about what to do," Dunn says. Fortunately, there are simple steps you can take to ensure prompt payment, and to recover debt to stay in the black.

1. Be Proactive. Entrepreneurs don't go through the difficult work of planning and launching new companies to become bookkeepers or bankers. However, proper invoicing and collections are just as important to the success of a new venture as bringing an idea to market, says Richard Weeks, senior vice president of Business Internet Services at Wells Fargo.
   
   "Managing cash flow and receivables has become even more critical in this environment," he says, noting that one of the best ways to handle those tasks is, literally, to take them to the bank. Some banks, offer a full suite of software tools for invoicing that may also facilitate electronic payments. It's a solution that could save business owners countless hours and thousands of dollars.
   
   There is a greater likelihood customers will pay if they can do so easily, Weeks says. If a customer has an existing merchant relationship with the business owner's bank, a credit or debit payment can clear automatically. "It takes set-up time of 24 hours, and as the process gets established it can cut [payment time] down six to 14 days," Weeks says.
   
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2. Watch For Signs. When a customer offers partial payments or is not answering calls, it's a warning sign, says William Dantin IV, president of the Corporate Investigations Bureau, a national collections agency. Dunn concurs. "Businesses should be watching their accounts early," she says. In this economy, that's around five to 10 days past due. "If they wait too long, the business may not be able to pay anyone any more," Dantin says.
   
3. Do-It-Yourself Recovery. If an account is past due, business owners may be able to collect by paying a personal visit. Dunn says, "Go see them at work, at the coffee shop, anywhere you know they will be." She believes the next most effective way to get paid is by calling. While sending a letter or late notice is OK, it may not trigger a prompt response.
   
   Consider a settlement if a customer is in a bad financial situation but has some cash, or if that customer plans to file for bankruptcy. To strike a deal, set a specific amount and make clear it is a one-time offer that must be paid in full. "Never take payments on a settlement offer," Dunn says.
   
4. Seek Professional Help. When delinquent payments are piling up and you spend more time trying to recover the funds than run the company, Dantin says it's time to call in a hired gun, preferably one with good references from the Better Business Bureau or the attorney general's office.
   
   Collection agents have expertise on debt laws as well as resources to find people who have no current address or phone and report them to the credit bureaus.
   
   Dunn says some businesses balk because they think they can't afford the fees. "If the agency doesn't collect anything, you don't pay anything," she says. While a reputable agency cannot guarantee results, it will often estimate an average recovery rate.
   
   Business owners must provide the agency with documentation to prove the debt or dispute, or they can't collect. Agencies are also unable to take a customer to small claims court or make a settlement without authorization.

Above all, Dantin emphasizes quick action. "Once they lock the doors and disconnect the phone, it gets that much harder to collect."