By Larry Chiang
Congrats on getting to $900k in revenue, getting an angel round done and avoiding the 9 VCs you don’t wanna meet. Now you’re in the kill zone cuz you have a working shippable product but you hit a speed bump through no fault of your own: the rePression (recession + depression).
A symptom of your revenue and the speed bump (a.k.a. the financial crisis meltdown) is people paying slowly or not at all. A lesson not taught in business school is how to collect on accounts receivable.
Here is a crash course in collecting money…
-1- Team Effort.
By ‘team’ I mean get the effen CEO involved.
If you have a VP of Sales they should definitely be calling to collect. Compartmentalizing the collection by leaving it to a sole administrator is dooming your collection effort to fail.
If the CEO won’t call, email this article to the HBS/GSB graduate (Harvard Business School and Stanford Graduate School of Business). Lets get ‘em out of the ivory tower and on the front lines of collection.
-2- No Fake Bankruptcies.
Fake orgasms are to make your partner feel good about themselves. Fake bankruptcies are meant to make the collector feel a sense of hopelessness so that the collector will stop calling.
Do not fall for the faker.
-3- Sell to Collections Firm.
Before you give up completely, sell to a collections firm for 10 cents on the owed dollar. Me, I’m like a multiple personality CEO because I turn into a repo man and get 40 cents/dollar at the drop of a hat. A
repo man repossess cars for a living and is at the bottom of the collection food chain. The upside is they are at the top of the aggression ladder.
-4- Got Cash?! Borrow Against Accounts Receivable
Your accounts receivable (AR) is an asset you can borrow against. In good economic times you can borrow up to 110%. After the worse job report in 115 years relased Friday December 5th, 2008, you’ll be lucky
to get 15 cents per dollar on fresh, healthy AR.
No you cannot be unethical and unload your 120+ day paper on a rookie loan officer. Translation: it is not right to borrow against accounts receivable that are 120+ days late. It’s illegal to re-date and is blatent fraud.
-5- Pay As They Go.
Put them on a payment plan on money owed and / or curtail future services.
Have you heard of people that have a payment plan for their sofa?! The idea here is that lump sum payback is too far at the end of a rainbow. Don’t believe the rosy forcasts and collect twice a month.
-6- Voicemail the Shitake Out of Them
Voicemail their cell, work and home phone. There is no such thing as over voicemail-ification during business hours when someone owes you money.
Collection calls need to happen 3-5x per week. I’ll ask start-up CEOs, how many times they’ve called and most people quizically look at me.
Call and voicemail them repeatedly to effen get your money.
-7- Time Machine to Go To the Present
There’s nothing that makes collection easier than getting the CEO to guarantee the purchase PERSONALLY.
Collecting on loans personally guaranteed is much, much more fun.
-8- Call High Up The Food Chain
The ceo of the company that owes should be called. The goal is to set up a payment schedule with small steps towards paying the debt down.
-9- Tell On Them
In the same way that TransUnion, Equifax and Experian compile negative information in a database, Dun & Bradstreet compiles negative information and payment histories.
D&B (as they’re called) usually doesn’t take infrequent submitters but they definitely gather information as it relates to court cases. A nice tip is to threaten reporting on a bad debt to D&B and threaten filing a
lawsuit. An advanced tip is to sprinkle in the fact that you’ll sell to a collections firm (tip #3) if they don’t make at least a nominal payment (tip #5).
-10- More Deal Flow.
Don’t get demoralized just because some bad apples aren’t paying. The key is to collect on a portion of money owed but still get more deals in the door.
This means get more sales. Studies have shown that companies with more sales tend to do better than companies with waning sales 
Good luck collecting. If you have collection experiences to share, post them in the comments below
I founded http:/www.duck9.com, which educates college students on how to establish and maintain a FICO score over 750. I testified before Congress and World Bank in Beijing on credit.
My BusinessWeek blog
I first discovered UrbanSpoon when the Apple App store launched. It was the first app I downloaded for my phone and continues to be one of my most used. It uses the GPS but also lets you shake the iPhone to get sort of a slot machine effect and figure out “Where are we eating tonight?” As a wine blogger, I often review restaurants and have used UrbanSpoon to my advantage, making sure my reviews are accessible from their web site. From a blogger’s perspective, I’ve always received prompt customer service/tech support from the UrbanSpoon team.
My Shameless Video Contest Entry…Disclaimer: Please Help :-)
by tarynsouthern on December 12, 2009
First off, thank you to Brian for allowing me to do a guest post on Bub. Last week I contacted Brian to solicit some advice on how I could get the word out about a little video I recently released on YouTube.
A contest video.
First, let me preface by saying that I’ve never entered a video contest before. The opportunity cost just didn’t make sense – taking time out from other work to essentially create a free commercial for someone and then shamelessly self-promote it in hopes of winning a gift certificate (?) Didn’t seem worth it.
Then I came across this contest sponsored by Lash Allure MD. There’s a $100,000 pot at stake – which, needless to say, is much larger than most other online video contest winnings. Immediately, my mind was racing about the web content I could fund with 100k. No more brand or studio pitches in 2010? I’d be in heaven.
The best part (or, in some cases, the worst)? The winner is NOT chosen based on a subjective judging process. The system is clear: the person with the most “votes” wins. Each YouTube star rating counts as one vote, and one comment, per user, per day, counts as a vote. Simple, quantifiable. And yet, a little unfair for those who don’t have massive YouTube followings.
So I decided to enter. First with my own video, and then after realizing that I would never win on my own regards, I teamed up Olga Kay, a YouTuber with about 70,000 subscribers. To incentivise people to help, we decided to offer up $10,000 of the prize money to dedicated commenters. Every day for 20 days, we pose a new question in the annotation on the video. Answer the question, and you could win $500. $500 to twenty people = $10,000 total giveaway.
Shameless.
It’s now Dec. 12th – only 8 days before the contest ends. We are currently in 2nd place, behind a witty YouTube blogger with a big following, but with the a little nudge here and there from the right people, we could definitely win the grand prize.
We’ve received several little endorsements from friends – including tweets from Ryan Higa and Dave Days – and brought on a new, third partner – Phil DeFranco.
We are asking for your help because this isn’t about making money to put in a savings account. It’s a viral contest, and as such, Olga, Phil and I want to put that money toward advancing our own web content initiatives. Not to mention that we would still give away $10k (and a few other little surprises) to our commenters.
It’s hard for me to ask any favors of anyone, but in this case, I’m swallowing my pride.
So, please, if you have a chance today (and for the next 8 days) – rate and comment this video here —> http://www.youtube.com/watch?v=df2_CZCfAaE – and RT if you can
Oh, and for all of you business owners out there looking to hold promotional video contests – take a cue from Lash Allure MD. By judging a video contest on ratings and comments, rather than on the video content itself, the company is benefiting from the self-promotional efforts of people like me as well as the engagement and interaction of potential customers who are rating/commenting on the videos. Smart.
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