Small-town business heirs need to collect debts

By Dave Ramsey Comments 0
Published: October 22, 2009

DEAR DAVE: My dad died earlier this year. As a result, my mom and I inherited his auto parts business. He had a lot of accounts receivable piled up, and we need to collect these to keep the business going. We live in a small town where everyone knows each other. What’s the best way to handle this?

Susan

DEAR SUSAN: I’m so sorry for your loss. It’s never easy when a parent or spouse dies. I’m glad that you and your mom are working together. Hopefully, it has helped you two make it through this rough time.

I would make a list of the accounts and visit the people personally. Have a polite sit-down conversation in which you explain your situation and ask for their help in getting things current. See whether they can take care of the bill the day you visit. If not, ask in a nice way whether they can pay some of it that day, and try to find out when they can pay the remainder.

Don’t hire an outside person to handle this. You and your mom can work the phones and pound the pavement. Most of these accounts are probably local folks, and there’s a good chance some friends and neighbors are in the bunch. You don’t want to be confrontational or unkind, because you will need these people if the business is going to survive.

Going forward, you need to stop running so many accounts receivable. It’s a pain having those things hanging over your head, and at some point it will become tough to make a living. Otherwise, if you can’t clear this up and get the business running on a cash basis, you may have to close the shop.

DEAR DAVE: When paying extra on a car note or mortgage payment, is it a good idea to write a separate check?

Scotty

DEAR SCOTTY: Absolutely! You can include the extra check in a separate envelope with the regular payment, but make sure you write "principle only” in big, bold letters on the envelope and on the check. Also, include the account number in the notation line at the bottom of the check.

Some companies use payment booklets that have a box specifically for entering any amount you want applied directly to the principle. This method is OK, too. Just make sure you keep a good, solid record of the monthly and overall amount you’ve designated to be applied only to the principle.

Follow these guidelines, and you’ll be much less likely to run into a sticky situation because some bozo threw the check into an escrow account or chalked it up as a prepaid payment.

E-mail questions for Dave Ramsey to davesays@daveramsey.com. For more financial advice, go online to www.daveramsey.com or call (888) 227-3223.