Collections that work

• A written estimate or contract with scope, price, payment terms and a due date.
• A deposit where your state allows it (state rules vary; see B101.9).
• Change orders in writing. They settle the "I never agreed to that" argument before it starts.
• The invoice sent the day you finish, with photos of the completed work.
• Commercial customers set up early: W-9 and certificate of insurance on file, so your invoice isn't stuck in their system.
• Lien notices sent on time where your state requires them. Missouri, for example, requires the original contractor to give its customer a written notice before receiving any payment, as a condition of its own lien.

Lien deadlines are short and depend on your state and your role on the job. They usually run from your last day of work, not the invoice due date, so check yours at every step. In Kansas, subcontractors and suppliers must file within 3 months of their last work, with no extension on homes. Check your own deadline with counsel and write it on the job file the day you finish.

Small claims court is usually set up for people without lawyers, up to a dollar limit your state sets. Collection agencies usually keep a share of what they collect, so get the fee in writing. An attorney can send a demand letter, file suit or enforce a lien.

Example (made-up numbers). Dee runs the books for Ray's shop. A property manager owes $4,800 for striping finished June 2 and due July 2. Dee writes the lien deadline on the job file on June 2. On July 2 she sends a reminder. On July 9 she calls, and the manager says one row of stalls was striped wrong. Ray fixes it on July 11, and the check arrives the next week.

Listen first. If a customer says something's wrong, go look, and fix real problems fast. If only part of the bill is in question, ask them to pay the rest now.

A payment plan goes in writing: the amounts, the dates, and what happens if a payment is missed. Keep notes on every call: the date, who you talked to and what they said.

The federal debt collection law covers third parties collecting personal, family or household debts. A business collecting its own invoices under its own name is generally outside it, and business debts are outside it entirely. State law and fair dealing still apply, and if you hire an agency to collect from a homeowner, the agency is covered.

Never threaten what you can't or won't do: a lawsuit you won't file, a lien after your deadline has passed, police or jail, or calls to the customer's boss or neighbors. Some threats can break state law even where the federal collection law doesn't apply.

• Small Business Development Centers: free help setting up terms and collections (find your SBDC).
• SCORE: free mentoring (score.org).
• Your state court's small claims self-help pages, which explain limits and filing steps.