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Time to collect

Dear Dave,

I have a small business doing work on houses. We have lots of repeat business, but sometimes people don't pay and we have to drop them as customers. Do you have any advice for avoiding these situations?

- Steve

Dear Steve,

Virtually every small-business owner runs into this problem. The truth is collecting isn't a customer problem; it's a sales problem on the part of the business.

When we sell advertising for my radio show then have trouble collecting, it means we sold the account improperly. Now, what is a properly sold account? A properly sold account is one in which we approached a qualified customer who had money, and the relationship was constructed in such a way that they realized from the beginning paying us on time was an -important-even vital-part of the relationship.

When we sit down with potential advertisers, we make it clear that we will bill them exactly on the 25th of the month. We also stress that we expect to be paid within five days. If we don't have your payment by the first of the next month, you'll be getting a phone call. Then, if you don't respond to the call by the 15th, you won't advertise with us ever again.

That may sound harsh, but I believe a thorough understanding is essential in all business transactions. It keeps things professional and eliminates a lot of unnecessary stress for you, your team and your bottom line!

- Dave

Dave Ramsey is America's trusted voice on money and business. He's authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at