a veteran personal
finance journalist and
the editorial director
of Policygenius, a
New York City insurance
What to Say When They Don’t Pay
Collecting what you’re owed requires a
smart combination of carrot and stick.
JEANINE SKOWRONSKI ; WEALTH SHARE
leni Gianopulos spent more than
15 years selling her handmade
sugar cookies to a famous gour-
met grocery chain. Then Dean &
DeLuca stopped paying its bills.
By January 2018, Gianopulos,
founder and owner of New York
City–based bakery Eleni’s Cook-
ies, realized that she might never be paid for $86,000 worth of
2017 custom holiday orders. “No one in the accounting depart-
ment was answering phone calls,” she recalls. “They were not
returning emails, there was no correspondence.”
Gianopulos would learn that Dean & DeLuca was in finan-
cial trouble, and the company made headlines this year by
closing stores and reportedly sti;ng other vendors. But she
had already sued the chain, and ultimately settled for half
the debt in 2018. (Dean & DeLuca declined to comment.) An
unpaid $86,000 purchase order might sound extreme, but the
average U.S. small business has $53,399 in outstanding receiv-
ables, according to a 2019 report by Intuit. That’s a big reason
61 percent of owners worldwide struggle with cash flow, and
nearly a third—in a rather vicious cycle—are unable to make
payments on loans or compensate vendors, themselves, or
their employees, the report found.
If this sounds all too familiar, consider these tactics to ease
your cash-flow headaches—and collect overdue payments.
Delay payables; accelerate receivables. When it became
clear Dean & DeLuca wasn’t going to pay up, Gianopulos
contacted her suppliers to explain the situation. Each was
willing to extend terms until the matter was resolved, she
says, which prevented larger cash-flow issues at the bakery.
Conversely, ask your other clients to consider paying early,
suggests Curt Mastio, owner of Founder’s CPA, a Chicago-based
accounting firm for startups and small businesses. If they’re
reluctant, o;er a small discount for paying up front, he adds.
“We’ve had success collecting hundreds of thousands of dollars
by calling five or six large clients and saying, ‘Our business is
scaling. If possible, could you pay the amount due early? The
additional cash would be very helpful to fuel growth right
now,’;” says Carisa Miklusak, founder and CEO of Cincinnati-
based Tilr, a hiring app that often pays its contractors in
advance of invoicing clients. “You don’t have to say somebody
Go to a third party. If you lack a line of credit or business
credit card, there are online lenders you can tap for fast cash—
though interest rates and fees run high. Likewise, there are
outfits that buy outstanding invoices, but you’ll be selling
the debt at a discount. If you turn to third-party financing,
pay particular attention to what happens if you default—and
whether you’re subject to personal liability, Mastio says.
“If it’s a very complicated deal, walk away,” says Oren
Zaslansky, founder and CEO of Flock Freight in Solana Beach,
California, who’s tapped various sources during his 20-year
tenure in the freight-shipping industry. Be wary of mezzanine
financing, which entitles lenders to equity in your business if
you fall behind, he says.
Sue. Depending on where you live and the amount owed,
small-claims court can be a good option, says Domenic Romano,
managing partner at Romano Law, in New York City. But if the
amount is significant, be prepared to play hardball and hire
lawyers, as Gianopulos did.
To increase your odds across legal options, send truant
clients an overdue invoice every 30 days. These updates are
called accounts stated. Follow up by phone and email, and
keep any formal acknowledgments the client sends. That
could help you avoid court and get paid. “The squeaky wheel
gets the grease,” Romano says. Gianopulos can attest to that.
“It was painful to understand that after all our hard work, we
were not going to get paid in full,” she says, but “at some point,
you have to realize 50¢ on the dollar is better than nothing.”
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