How do you pressure your biggest client to pay its bills without jeopardizing the relationship? We have about 15 clients, but this group provides about 30% of our revenue. They usually pay up after some pressure and an occasional threat. But the amount of money they owe makes the situation more precarious than we are comfortable with.
Eric Lund, MedSource Consulting Inc.

Collections, as any repo man will tell you, is no racket for shrinking violets. Still, you don't want to go Sopranos unless you have to. The first step is to ensure that your customers can't plead ignorance. To do that, make the payment terms on your invoices and contracts absolutely clear. Then follow up that invoice with a phone call to make sure it was received and is rolling merrily toward payment.

If you still find too many checks aren't in the mail, you may have to revamp your billing process. So says Mike Clifford, president and founder of Clifford Public Relations in New York City. Clifford was sick of chasing late pays at the end of projects, so he began requiring partial payment, usually about one-third, up front. The company tracks hours and expenses and sends the client a monthly reconciling invoice. He hasn't had to play bad cop since. Tom Coughlin, by contrast, simply refuses to take no for an answer. The chairman of Alliance Group Services, a Westport, Conn., telecommunications outfit, "absolutely demands" payment in 30 days. "Once people learn this is the way you do business, no one is going to screw with you," he says.

Confrontation make you tense? Try reasoning with your client in a nonadversarial setting, such as a ball game or in a restaurant, says Martin J. Lieberman, a partner at Rosen Seymour Shapss Martin & Co., a New York City accounting firm. "It comes down to 'Do I like this person? Do I like doing business with this company?" says Lieberman. If you've answered yes to A and B, then hammer out something that works for you both, such as staggered payments or even discounts for future early payments.

I have a customer in Mexico who does the same kind of work I do -- only his employees cost about $400 per month, compared with $2,400 for me. I'm considering moving part of my production to Mexico. How can I ensure the move will be successful?
Chris Gill, Heritage Microfilm
Cedar Rapids, Iowa

Manufacturing in Mexico is a whole nother enchilada from doing it stateside. Yes, it can save you loads of money, but it's also a risky, low-margin enterprise beset by all manner of potential problems, including confusing regulations, low productivity, and cultural confusion. It's essential to invest lots of time and effort into designing your plant and building the appropriate network of contacts before getting started.

Once you're up and running, you'll need a strong floor manager backed by the same technical support your U.S. operation gets. "Most American business owners think the labor and other costs are so cheap that they can run the operation remotely from the U.S.," says Tony Magnone, president of Specialty International, a Los Angeles - based contract manufacturer of fabricated metal parts that just opened an offshore factory in Monclova, Mexico. Convinced that there is no next best thing to being there, Magnone bought a second home in Mexico and spends about a third of his time there, managing employees, meeting with customers, and networking with potential clients. Nor does he plan to spend less time in Mexico once the sailing appears smooth. "I don't run the machines or program parts, but I will keep doing all of those things that made us successful in America," Magnone says.

How does an entrepreneur running an established company secure debt financing without encumbering personal assets? We're a six-year-old company that's doing quite well. We need about $1 million for product development, but it seems that every lender wants a personal guarantee.
Name withheld
Pleasanton, Calif.

You really don't have many options. The fact is, most small business loans are backed by a personal guarantee. If your lender seems particularly inflexible or unreasonable, you can always try and find another one. That's what Steve Peplin, president of Talan Products, a metal stamper based in Cleveland, did. When his business hit a rough patch, Peplin's longtime banker suddenly demanded that he personally guarantee 100% of his company's business loans. So Peplin shopped around, eventually finding a bank that asked for a partial guarantee. With his business back on track, and his relationship with the new lender developing nicely, Peplin hopes to get off the guarantee completely within a year. "People do business with people," Peplin says. "Bankers that have a personal history with you should be more likely to help you." Besides, he adds, look at it from their point of view. A personal guarantee, he says, shows that "you won't just hand them the keys if things get dicey."

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