How to Collect On Debts Owed to Your Business
For many small business owners, being paid on time and in full can be a constant struggle. But while most customers will ultimately pay what they owe, you may eventually work with a client that refuses to make good on their debts. If you’ve rendered a product or a service but you’re facing difficulties when attempting to obtain payment, you may need to delve further into some debt collections tactics. In the interest of receiving what you’re owed, you may want to try the following tips.
Document and Gather Data
One of the best things you can do is to document every interaction you have with the indebted customer. Not only will this help you keep important details straight, but it will also strengthen your case if you determine that hiring a collections law firm is the right course of action. All email correspondence should be saved and any notification sent by mail should be copied and certified. If it’s legal in your state, you should record phone conversations; in areas where this is not allowed, you should attempt to transcribe your conversations with the client to the best of your ability. Be sure to gather any and all documentation or other data you have as it pertains to this client, as well, including a history of late payments or other evidence. Even if you don’t have to take this case to court, simply having this data can often compel the client to pay what they owe.
Be Persistent Without Harassing
If you expect to collect on money owed to your business, you can’t simply hope for the best and wait for the check to arrive in the mail. You need to be proactive about contacting the customer on a fairly regular basis and present them with options to pay their debt. This does not mean, however, that you should contact them every hour (or even each day) and make threats. There are certain regulations to which creditors are held — and even if your extreme tactics are technically allowed, they’re not likely to produce your desired result. Be strategic in the way you contact customers who owe money and remember that you’ll catch more flies with honey than you do with vinegar.
Consider Legal Remedies
Of course, there are some clients who will avoid paying what they owe at all costs. If you’ve already tried collecting the debt on your own and have come up empty, it may be time to consider working with a collections attorney. In some cases, a collections attorney may advise you on some strategies that can allow you to receive the amount you’re owed with no further action required; the threat of involving a collections lawyer may be enough to convince your client to cooperate. However, it may also be that you’ll need to take legal action. Most states allow creditors to sue in small claims court depending on the amount of the lawsuit (which can range from a few thousand dollars to $10,000). Involving a collections attorney at this stage can be one of the only ways for you to receive what you’re owed — or, at the very least, for a judgment to be made against the customer. While there’s no guarantee that the client will have the means to pay their debts, pursuing a lawsuit with help from a collections attorney may prove effective when other methods of debt collection have not.
If you’re struggling to collect on debts owed to your business, you may benefit from professional legal help. For more information or to schedule a consultation, please contact the Law Offices of Noam J. Cohen today.