My dad died earlier this year, and 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?
I’m so sorry for your loss. It’s never easy when a parent or spouse passes away. I’m glad that you and your mom are working together, though. Hopefully, it has helped you two make it through this rough time.
I would make a list of the accounts, and go visit them all personally. Just have a polite, sit-down conversation, where you explain your situation, and ask for their help in getting things current. See if they can take care of the bill today. If not, ask in a nice way if they can pay some of it today, and try to find out when they can pay the remainder.
Make sure you don’t hire an outside person to handle this situation. 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.
At the same time, you need to stop running so many accounts receivable going forward. It’s a real pain having those things hanging over your head, and at some point it will become tough just 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 up shop.
My husband and I are debt-free except for our house. Should we start saving to invest in a small business idea before the home is paid off like you did?
That’s not exactly how I did things, but sure you can. I don’t have a problem with that at all. When I started my business I started from nothing, so I didn’t have to save up for anything and it’s always paid its own way.
You’re about to have some real fun being an entrepreneur, Jenny. Go ahead and put aside $2,000 or so, then tear into the house payments and get that mortgage knocked out.
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