Law Firm Guides On How To Collect Debts For Small Businesses
It is unavoidable that any owner of a big or small business encounters customers or clients that are just not willing to pay. It is especially famous in the service industry, since services are continuous processes and not a one-time purchase of the product.
It is not a surprise that many small businesses don’t succeed in the first two years, and the lack of abilities on collecting unpaid debts from non-paying clients are probably a huge contributor towards business failure.
When starting a business, there are specific strategies that can be implemented that can help avoid the burden of non-paying customers. The following are just some quick lists of tips for small business collection.
1. Get in touch with the client through phone calls
Contact them as soon as the bill is already overdue to know if they have a valid reason for why they can’t pay. Try to negotiate a different deadline for them to pay. Keep the phone call short as possible, and make sure that the person on the end of the line does not take the call personally. Always be clear that there is a debt that needs to be paid.
2. Send an email or letter of demand
If there is still no payment received, consider sending a letter of request indicating the amount overdue, the extended deadline by when the payment is expected, and the consequence that they will receive if they fail to pay again on time.
3. Have a collection agency to write the letter of demand
Collection agencies are experts when it comes to collecting money that is already past due. That’s why they can also produce significant demand letters as well. Many collection agencies offer this service for writing letters to a fixed value.
4. Engage with a collection agency
Collection agencies can often be the last resort to collect any payment from the debtor. These collection agencies often demand up to fifty percent of what they receive. Receiving some of the payment is much better rather than getting nothing at all.
5. File legal proceedings
If engaging with a collection agency is not an option, there is still another option which is to file lawsuits to recover the money from the debtor. It’s best if your company has its own business lawyer from a reputable Law firm so you would understand the entire legal process of getting your money back. There are greater costs related to this method. However, it is also the same as attorneys and court costs.
Takeaway and Author Credits
A business owner must realize first that no matter how good the clients are, if they don’t pay on time, then they are not great customers. It is not a good idea to keep doing business with a client who disregards an unpaid bill. That is why it is necessary to keep on track with the convenient ways to collect debts.
Patrick Monahan is the managing partner of Monahan Law Firm, PLC. Patrick began his legal career practicing real estate, construction, and general business litigation.Over the years, Monahan Law Firm, PLC has expanded to serve clients in domestic relations, personal injury, and estate planning.