08.10.18 | Business Law

Tips to Collect Your Business Debt

Unfortunately, the  worst part of owning a business is making sure that you are getting paid. The more people that you work with, the more likely that you are going to have at least one or two people who owe you money at all times. Here are some tips to help you collect your business debts.

Have a clear payment policy to collect on time

If your customers don’t know what you expect, how can they follow the rules? Make sure that they know that you expect payment up front. If you send out bills at the end of every week or month, let them know. Give them a timeline of when you expect payment after bills are mailed.

Keep up with it

It is your job to monitor what bills are going out and when they are getting paid. You should make sure that you keep an eye on this on a regular basis, so you can follow up when someone is late. You can’t expect to collect when you haven’t sent them a bill in quite a while.

Even better, keep track of everything through documentation

You need to write down every time that you send a letter and speak to the customer. This will help if you end up going through a collection’s agency.

Start by sending a letter

The first thing that you should do is send a letter asking your customer to contact you at their convenience to talk about their late-payment. This gives them time to get themselves together so that they can talk to you calmly and rationally.

Then, follow up with a phone call if you don’t hear anything from them

Give them adequate time to call you back. If you don’t hear from them after a month, you have every right to call them to find out when they are going to pay up. Make sure that you are mentally prepared and able to stay calm before you make these phone calls.

Phone calls are often hard to ignore, unlike mail, which can easily be thrown away without a second glance.

Then, you should take legal action

You should have a lawyer to help you through this step. They can send a certified letter demanding that you get paid. They can also threaten them if they don’t send in the money that is owed to you.

Demand letters are often scary enough to make customers settle up their bills.

If that doesn’t work, you may want to go to court or even hire a collection agency

You should discuss this with your lawyer before you start any legal proceedings. You may be able to sue your customer to ensure that you get paid but the legal fees may outweigh the money that you will collect in return. The same goes for collection agencies. Is it worth fighting over a small bill? Only you can decide how far you are willing to go to get paid.

Make sure that you have a business lawyer and a collection agency before you need it

If you wait until you have several customers who won’t pay, you are going to struggle to find a lawyer or a collection agency. It takes time to build a relationship with each, so you shouldn’t wait. Find someone now (before you need it).

Collecting money is never easy. However, it is important that you have rules regarding payment. Your customers need to know what to expect or they won’t be able to follow them. You should also have a lawyer and a collection agency on your side before you ever need it. It is also important to think about how far you are willing to go to get payment. When you get lawyers and collection agencies involved, you are going to have to think about the cost.

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