(FORTUNE Small Business) – In 1938, Morris Sher opened up a furniture store in Birmingham, Ala., so he could sell couches to people who had poor credit ratings and were shunned by other retailers. For 50 years, Sher helped his customers find a way to pay until his two sons inherited the business and transformed it into AmSher Receivables Management, a collection and consulting agency. Their charter: to continue helping local small businesses become credit-savvy customers and to advise them on how to efficiently collect their receivables. Today Sher's sons, David and Martin, travel nationwide, preaching their strategies to entrepreneurs at Champion Collections seminars they sponsor. Their principles are outlined in their new book, Collect Debts and Still Keep Your Customers (Amacon, $24.95).

To find out how small companies can practice a more streamlined debt-collecting approach, we caught up with David, 57, who also served as president of the International Association of Commercial Collectors, a Minneapolis-based trade group that certifies and teaches collectors. Edited excerpts:

How important is it for small companies to think about having an efficient debt-collecting process when they launch their businesses?

It should be the first thing they think about, but it never is. They just assume that they'll have $1 million in sales and naturally get $1 million back in collections. But if you're extending credit, that's not going to happen, for two reasons: A) there are people who just will never pay, and B) many will pay you very slowly, which can be just as agonizing.

Due to the economic slowdown, is it getting harder to collect debts in certain industry sectors?

No. Economic slowdown or not, this phenomenon affects every business--utility companies, bankers, department stores, landlords--all the time. In truth, only the person who doesn't ask doesn't get paid.

So how can a small company deal with this right off the bat?

The first thing to do is to provide some type of credit application for your clients that will aid you in collecting the account. Ask for basic client information like a phone number, a bank account number, or Social Security number. These are all things that can be tracked and verified. It's also important to have a written credit policy. The policy should spell out who's responsible for writing up the credit application and how it should be verified. It's also good to maintain good billing processes.

What type of billing practices do you recommend?

Making follow-up phone calls right after bills are sent to find out if your customers are satisfied and to reemphasize your credit terms. That means reiterating what we call the urgent first payment, the notion that customers need to make their first payment on time. If you don't communicate this with clients, they'll have no idea what your expectations of payment are. Another good billing practice is to keep management reports to track debts. Most billing systems show the aging of accounts receivable (usually in 30-day increments). The best thing to do is produce these reports each month and then compare them. This way you should be able to track which customers are consistently late in paying their bills.

How do you know which debtors to call and act upon first?

Always act on the most current receivables that have the biggest balances. That's because the collectibility of an account goes down over time. And use common sense. If you have one client who owes you $100 and another who owes you $1,000, who are you going to pounce on first? Eighty percent of people will always pay their bills, and 2% are "credit criminals" who will never pay. Don't waste time trying to collect from these people. Focus on the other 18% of clients who mean to pay but are stuck with cash-flow problems.

Are payment incentives and penalty charges something to be considered?

Perhaps. One of the possibilities is to offer a percentage discount on outstanding balances. For instance, tell your customers that if they pay in full in 10 business days, they can have a 1% discount. But if you want to charge interest, keep in mind that once an account becomes delinquent, you have to have some sort of system in order. You have to hire an attorney to make sure that what you're charging is legal (credit laws vary from state to state). Now, will everyone pay the interest? Probably not. But it gives you something to negotiate with at the end. Typically we see small businesses charge 1.5% per month.

So who at the company should be in charge of collections?

The owner of the business needs to oversee this. He or she can bring in an outside collection agency like us if it's determined that a customer has no intention of paying. Such agencies charge a percentage of what they collect.

Is there a secret to maintaining the goodwill of the debtor?

You can win him over as long as you're persistent and consistent. Give excellent customer service. You really can't be a mediocre company and expect people to pay you.