Debt Collection: Things to Consider

Debt Collection is no laughing matter
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Unfortunately, circumstances can sometimes make it very difficult for a business to pay its suppliers, contractors, or other people to whom many is owed. As a business owner yourself, this puts you in a difficult position – after all, you have your own bills to pay and a non-paying customer can make things very tight. It may be that that the debtor has basically decided not to take responsibility for their debt, in which case your best option maybe to use a professional collection agency like Brennan & Clark. However, are some things you can do first before it gets to that stage.

Be Firm

Especially if you have a friendly relationship with the business owner who owes you money, it can sometimes be difficult to hold your ground on the uncomfortable issue of collecting money. You may be sympathetic to the circumstances that have made it difficult for your customer to pay, and you might want to be “good guy” and give them some more time. Ask yourself, however, if the people to whom you owe money will be as understanding if you have to explain to them why you can’t pay your debt. It is difficult for sure, in part because every business owner can imagine themselves in the same position. But bills have to be paid, and you need to take steps to make that happen.

Don’t Let the Issue Go Unaddressed

For small businesses in particular, the accounting might be less regular than is ideal. You can avoid some problems associated with late-payments simply by making sure that you have regular system of invoicing and tracking. Once you have become aware that there is a payment issue, establish a clear schedule for follow up. A first step might be to send a form letter to remind them that their payment is overdue. Sometimes, it may genuinely be the case that the customer has simply forgotten to pay. Invite the customer to contact you to discuss payment options. How the issue proceeds from there will depend on the reaction you get from the letter.

Consider Negotiating Before Threatening Legal Action

It may be the case that a customer genuinely wants to pay, but for whatever reason is not able to make a full payment, or is facing a cash flow problem and needs more time. If you threaten legal action, a debtor in this situation might feel like there is nothing to do but throw up their hands and let the process unfold. However, if you are open to negotiation, this might be the best option for you to recover the full amount of the debt. Consider whether you are able to accept partial payments over a longer term (with interest), or perhaps agree to a deferred payment. These situations are not ideal, but they do offer a way forward that doesn’t involve additional expense on your part.

Neither party in an unpaid debt situation has an easy task ahead of them. However, if there is some good will on both parts, it may be possible to resolve the issue without needing to involve third parties.