Business Debt Collections
Running a business often requires a delicate balancing act with your finances. You have bills to pay, and in order to afford them, you need your customers and clients to pay what they owe you.
So when you have clients who aren’t paying their debts to you, it can become quite disruptive to your operations. When those clients take too long to make any attempt to get current, you may need to consider pursuing legal action.
Your first step in handling long-overdue bills and invoices is to reach out to the person who owes you. Perhaps you’ll be able to make an arrangement that gets them back on track to paying you in full.
When that doesn’t work, however, you’ll need to escalate the situation.
Getting evidence together that supports your debt claims will come in handy. Collect any emails, receipts, invoices, and letters related to the matter. Start documenting when you have phone calls and what you discussed on those calls. If this progresses to the point of a lawsuit, you want to show that you did everything you could to recover before the courts had to get involved, and to prove you’re actually owed what you’re asking for.
Once you have all the information you need, you’ll decide how you want to pursue collection.
You have several options for trying to get some, or all, of the money you’re owed:
You could try contacting a business attorney to draft a letter to the debtor outlining key contract terms and threatening litigation. Sometimes, just knowing that a lawsuit against them may be forthcoming and it has the potential to be successful is enough to inspire payments.
If you decide you’re willing to take a bit of a loss to avoid litigation and still get something back you may chose to settle for a lower amount. The idea here is that some money is better than no money, so if there’s no way for the other party to pay you back in full, it may be worthwhile to accept at least some of what you’re owed.
Similarly, you can hire a debt collection agency. These groups will take over trying to get the debt paid so you don’t have to. They’ll take a big chunk of what they recover as payment, however, so expect to still take a loss here.
One of your last options for recovery would be to file a lawsuit. If you win, a judge could order them to pay you back. If the debtor really just doesn’t have the money to pay you the court may seize some of their other assets or garnish their wages. Often in these cases, you need to take them back to court to further compel payment or get payment in other ways.
Working with debt and legal experts can help you decide which course of action is right for you to try and recover as much as you’re owed as possible.